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problem 1: A company issued a $10,000, 90-day, non-interest-bearing note to the bank. The bank discounted the note by 10% (annualized percentage). What were the proceeds? Suppose 360 days in a year:

a. $9,000
b. $9,750
c. $10,000
d. $10,250

problem 2: ABC Company’s equipment was obtained for $200,000 and has a current book value of $125,000. The estimated market value of the equipment is $140,000 and the replacement cost of the equipment is $225,000. At what amount must the equipment be reported on the balance sheet?

a. $125,000
b. $140,000
c. $200,000
d. $225,000

problem 3: Unearned revenue is categorized as the given type of account:

a. Current Asset
b. Liability
c. Long-Term Asset
d. Revenue

problem 4: The total contract price for a construction project was $10,000,000 with an estimated construction cost of $7,500,000. Throughout the current year 30% of the project was completed and the cost incurred was $2,750,000. By using the percentage of completion technique of accounting, what amount of income would be identified for the year for this project:

a. $250,000
b. $750,000
c. $825,000
d. $2,500,000

problem 5: Acme Company is a business entity which has a reasonable expectation of continuing its business at a profit for an indefinite period of time. This is an illustration of the application of which of the given accounting concepts:

a. Business entity
b. Consistency
c. Going concern
d. Materiality

problem 6: Albert and Brian invest $150,000 and $75,000 correspondingly in a partnership and agree to a division of net income which provides for an allowance of interest at 8% on the original investments, salary allowances of $12,000 and $20,000 correspondingly and with the remainder divided equally (all in a given year). What would be Albert’s share of net income of $65,000 in a year:

a. $12,000
b. $31,500
c. $32,500
d. $34,000

problem 7: Deferred revenues of $100,000 were received and appropriately recorded in the ledger of the company. At the end of the accounting period, 20% of the deferred revenue had been earned, however unrecorded. The adjusting entry will need:

a. A debit to Cash and credit to Revenues for $20,000.
b. A debit to Unearned Revenues and a credit to Accounts Payable for $20,000.
c. A debit to Unearned Revenues and a credit to Cash for $20,000.
d. A debit to Unearned Revenues and a credit to Revenues for $20,000.

problem 8: Throughout its first year of operation, XYZ Company elected to use the straight line depreciation method for financial reporting purposes and the sum-of-the-years digits method to find out taxable income. The income tax rate is 35% and the amount of depreciation expense is $80,000 under the straight line method and $120,000 under the sum-of-the-years digits method. Determine the amount of income tax deferred to future years:

a. $14,000
b. $28,000
c. $40,000
d. $80,000

problem 9: The bonds payable account has a balance of $750,000 and the discount on bonds payable account has a balance of $150,000. Determine the carrying amount of the bonds:

a. $600,000
b. $750,000
c. $900,000
d. $1,050,000

problem 10: Assets total $700,000, liabilities total $150,000, and contributed capital totals $250,000. Determine the dollar amount of retained earnings:

a. $100,000
b. $300,000
c. $400,000
d. $550,000

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92838

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