ACCT 220 ACCT220 Final Exam Answers (UMUC)

ACCT 220 ACCT220 Final Exam Answers (UMUC)

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ACCT220 Final Exam (UMUC)

Multiple choice questions allocated 1% point each. Make your selection by recording the letter in the answer box provided.

 

Question 7: On 2010 July 1, Frick Company purchased equipment for $400,000, and installation and testing costs totaled $40,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $40,000. If Frick uses the double-declining-depreciation method, the depreciation expense for 2010 is:

Question 8: The result of recording a capital expenditure as a revenue expenditure is an: 

Question 9: A truck costing $45,000 and having an estimated salvage value of $4,500 and an original life of five years is exchanged for a new truck. The cash price of the new truck is $57,000, and a trade-in allowance of $22,500 is received. The old truck has been depreciated for three years using the straight-line method. The new truck would be recorded at: 

Question 10: Which of the following is not an advantage of the corporate form of organization? 

Question 11: Treasury stock should be shown on the balance sheet as a(n): 

Question 12: When the stockholders invest cash in the business, what is the effect? 

Question 13: The ending balance in retained earnings is shown in the: 

Question 14: A cash dividend of $500 was declared and paid to stockholders. The correct journal entry to record the declaration is:

Question 15: If $3,000 has been earned by a company’s workers since the last payday in an accounting period, the necessary adjusting entry would be: 

Question 16: The accrual basis of accounting: 

Question 17: The need for adjusting entries is based on: 

Question 18: Which of the following statements is false regarding the closing process? 

Question 19: Which of the following statements is true regarding the classified balance sheet? 

Question 20: The underlying assumptions of accounting includes all the following except: 

Question 21: Frick Company began the accounting period with $60,000 of merchandise, and net cost of purchases was $240,000. A physical inventory showed $72,000 of merchandise unsold at the end of the period. The cost of goods sold of Frick Company for the period is: 

Question 22: A classified income statement consists of all of the following major sections except for: 

Question 23: A business purchased merchandise for $12,000 on account; terms are 2/10, n/30. If $2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be: 

Question 24: Frick Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of ending inventory using weighted-average is: 

Question 25: Frick Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of goods sold using weighted-average is: 

Question 26: During a period of rising prices, which inventory method might be expected to give the highest net income? 

Question 27: The following information: related to the bank reconciliation of the Flip Company: 

Question 28: In a bank reconciliation, deposits in transit should be: 

Question 29: After the bank reconciliation is prepared, the entry to record bank service charges would have a credit to: 

Question 30: Frick Company estimates uncollectible accounts using the percentage-of-receivables method and expects that 5 percent of outstanding receivables will be uncollectible for 2010. The balance in Accounts Receivable is $200,000, and the allowance account has a $3,000 credit balance before adjustment at year-end. The uncollectible accounts expense for 2010 will be: 

Question 31: Frick Company issued its own $10,000, 90-day, non interest-bearing note to a bank. If the note is discounted at 10 percent, the proceeds to Frick are: 


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