Question 1

1. All of the following are reasons to use an estimated method of costing inventory except:

   		Perpetual inventory records are not maintained.
   		Purchase records are not maintained.
   		A disaster has destroyed the inventory records and the inventory.
   		Interim financial statements are required but physical inventory is only taken at the end of the financial accounting period.

0.5 points

Question 2

1. A corporation has 50,000 shares of $28 par value stock outstanding that has a current market value of $150. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately

   		$7.00
   		$112.00
   		$37.50
   		$600.00

0.5 points

Question 3

1. The depreciation method that does not use residual value in calculating the first year's depreciation expense is

   		straight-line
   		units-of-production
   		double-declining-balance
   		none of the above

0.5 points

Question 4

1. If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?

   		Uncollectible Accounts Expense
   		Accounts Receivable
   		Allowance for Doubtful Accounts
   		Interest Expense

0.5 points

Question 5

1. If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?

   		Uncollectible Accounts Expense
   		Allowance for Doubtful Accounts
   		Accounts Receivable
   		Interest Expense

0.5 points

Question 6

1. Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit

   		Bad Debt Expense and credit Accounts Receivable
   		Bad Debt Expense and credit Allowance for Doubtful Accounts
   		Allowance for Doubtful Accounts and credit Accounts Receivable
   		Accounts receivable and credit Allowance for Doubtful Accounts

0.5 points

Question 7

1. In management's internal control report that is now required of all public companies, which of the following does not have a direct effect on a company's internal control system?

   		internal auditors
   		independent accountants
   		Board of Director's audit committee
   		Board of Trustees

0.5 points

Question 8

1. Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n)

   		deduction from the balance per company's records
   		addition to the balance per bank statement
   		deduction from the balance per bank statement
   		addition to the balance per company's records

0.5 points

Question 9

1. Which of the following would most likely be classified as a current liability?

   		Two-year Notes Payable
   		Bonds Payable
   		Mortgage Payable
   		Unearned Rent

0.5 points

Question 10

1. Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is

   		$11,636
   		$16,000
   		$11,000
   		$8,000

0.5 points

Question 11

1. Garrison Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $45,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory cost at retail to be $80,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.

   		$160,000
   		$80,000
   		$40,000
   		$45,000

0.5 points

Question 12

1. Which of the following is not a right possessed by common stockholders of a corporation?

   		the right to vote in the election of the board of directors
   		the right to receive a minimum amount of dividends
   		the right to sell their stock to anyone they choose
   		the right to share in assets upon liquidation

0.5 points

Question 13

1. Power Company sells merchandise with a one year warranty. In 2012, sales consisted of 1,600 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2012 and 70% in 2013. In the 2012 income statement, Power should show warranty expense of

   		$4,800
   		$11,200
   		$16,000
   		$0

0.5 points

Question 14

1. Immediately prior to the admission of Allen, the Sanson-Jeremy Partnership assets had been adjusted to current market prices, and the capital balances of Sanson and Jeremy were $80,000 and $120,000 respectively. If the parties agree that the business is worth $240,000, what is the amount of bonus that should be recognized in the accounts at the admission of Allen?

   		$60,000
   		$80,000
   		$40,000
   		$100,000

0.5 points

Question 15

1. Which of the following statements is not true about a 2-for-1 split?

   		Par value per share is reduced to half of what it was before the split.
   		Total contributed capital increases.
   		The market price will probably decrease.
   		A stockholder with ten shares before the split owns twenty shares after the split.

0.5 points

Question 16

1. Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $80,000 and $120,000 respectively. Income Summary has a credit balance of $30,000. What is Saturn