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ACC113

Mid-Term Revision

1st Semester 2021/2022

Multiple Choice Questions

له يجوز ولا للدراسة، فقط لنفسه منها الإنتفاع بالدورة للمسجل يحق حيث. الإقتصادي التعلم لمركز محفوظة النشر حقوق@

النقل أو خلالها، من الغير تدريس أو للغير، طباعتها/ بها التبرع/ تناقلها/ تصويرها أو المذكرات، هذه بيع

. بالمركز المادة مدرس أو المركز إدارة من مكتوب بإذن إلا كانت، طريقة بأي محتوياتها من


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Chapter 10

1. Depreciation expense is calculated using its cost, estimates of an asset’s salvage value,

and an estimated useful life.

a) True.

b) False.

2. The units-of-production method of depreciation charges a varying amount of expenses for

each period of an asset’s useful life.

a) True.

b) False.

3. Revenue expenditures are also called balance sheet expenditures.

a) True.

b) False.

4. Riffa Enterprises purchased a depreciable asset on October 1, Year 1 at cost of $132,000.

The asset is expected to have a salvage value of $15,800 at the end of its five-year useful

life. If the asset is depreciated on the double-declining balance method, the asset’s book

value on December 31, Year 2 will be :

a) $71,280.

b) $28,512.

c) $37,908.

d) $25,272.

5. A company purchased a delivery van for $18,200 with a salvage value of $2,200 on

September 1, Year 1. It has an estimate useful life of 5 years. Using the straight-line method,

how much depreciation expense should the company recognize on December 31, Year 1.

a) $3,200.

b) $3,640.

c) $800.

d) $1,067.

6. An asset’s market value includes all normal and reasonable expenditures necessary to get

the asset in place ready to intended use.

A) True.

B) False.





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7. Depreciation does not measure the decline in market value of an asset each period.

A) True.

B) False.

8. Extraordinary repairs are expenditures extending the asset’s useful life beyond its estimate,

and are capital expenditures because they benefit future periods.

A) True.

B) False.

9. When originally purchased a truck costing BD 23,000 had an estimated useful life of 8 years

and an estimated salvage value of BD 3,000. After 4 years of straight-line depreciation, the

asset’s total useful life revised from 8 years to 6 years and there was no change in the

estimated salvage value. The depreciation expense in year 5 equals:

A) BD 2,875.

B) BD 5,750.

C) BD 5,000.

D) BD 2,500.

10. A company purchased a mineral for BD 800,000. It expects to produce 120,000 tons of

minerals and to have a salvage value of BD 50,000. In current year, the company mined

and sold 9,000 tons of minerals. Its depletion expense for the current period equals:

A) BD 56,250.

B) BD 139,500.

C) BD 150,000.

D) BD 15,000.

11. Revenue expenditures:

A) Are additional costs of plant assets that do not materiality increase the asset’s life or

its productivity capabilities.

B) Are known as balance sheet expenditures because the relate to plant assets.

C) Extend the asset’s useful life.

D) Substantially benefit future period.

12. Saya Company purchased a machine on January 1 from BD 1,700. This machine has useful

life of 10 years and a salvage value of BD 200. What would be the book value of asset at

the end of the first year of its useful life using the double-declining-balance method?

A) BD 340.

B) BD 1,160.

C) BD 300.

D) BD 1,360.





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13. Owning patent:

A) Gives the owner the exclusive right to publish and sell music or literary work during

the life of the creator plus 70 years.

B) Gives its owner an exclusive right to manufacture and sell a device or to use a

process for 50 years.

C) Gives its owner exclusive right to manufacture and sell a patented item or to use a

process for 20 years.

D) Gives the owner the exclusive right to publish and sell music or literary work during

the life of the creator plus 17 years.

14. A company purchased a machine for BD 190,000. The machine has a useful life of 8 years

and a residual value of BD 10,000. It is estimated that the machine could produce 75,000

units over its useful life. In the first year, 15,000 units were produced. In the second year,

production increased to 19,000 units. Using the units production method, what is the

amount of accumulated depreciation at the end of the second year?

A) BD 48,133.

B) BD 81,600.

C) BD 45,600.

D) BD 23,750.

15. Plant assets ae used in operations and have useful life that extend over more than one

accounting period.

A. True.

B. False.

16. Extraordinary expenditures:

A. Are additional costs of plant assets that do not materiality increase the asset’s life.

B. Are revenue expenditures.

C. Extend the useful life of an asset beyond its original estimate.

D. Are expensed when incurred.

17. The depreciation method that charges the same amount of expense to each period of the

asset’s useful life is called:

A. Straight line.

B. Double decline.

C. Double balance.

D. Unit production.





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18. Residual value is an estimate of an asset’s value at the end of its useful life.

A. True.

B. False.

19. Amortization:

a. The systematic allocation of the cost of an intangible asset to expense over its

estimated useful life.

b. The process of allocating the cost of natural resources to periods when they are

consumed.

c. An accelerated form of expensing asset’s cost.

d. The process of allocating to expense the cost of plant asset to the accounting

periods benefiting from its use.

e. Also called depletion.

20. Ngu owns equipment that cost $104,900 with accumulated depreciation of $71,600. Ngu

asks $37,850 for the equipment but sells the equipment for $34,900. Compute the amount

of gain or loss.

a. $1,600 gain.

b. $4,550 loss.

c. $1,600 loss.

d. $4,550 gain.

21. A company had a tractor destroyed by fire. The tractor originally cost $132,000 with

accumulated depreciation of $66,300. The proceeds from the insurance company were

$27,000. The company should recognize:

a. A loss of $65,700.

b. A loss of $38,700.

c. A gain of $65,700.

d. A gain of $38,700.

22. The cost of land would not include:

a. Cost of parking lot lighting.

b. Costs of removing existing structures.

c. Government assessment.

d. Purchase price.

e. Fess for insuring the title.





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23. Land improvements are:

a. Also called basket purchases.

b. Assets that increase the usefulness of land, but have a limited useful life and are

subject to depreciation.

c. Assets that increase the usefulness of land, and like land, are not depreciated.

d. Expensed in the period incurred.

e. Included in the cost of land account.

24. Depreciation:

a. Measures the decline market value of an asset.

b. Is an outflow cash from the use of plant asset.

c. Measures physical depreciation of an asset.

d. Is applied to land.

e. Is the process of allocating the cost of plant asset to expense.

25. Plant assets are defined as:

a. Current assets.

b. Tangible assets that have a useful life of more than one accounting period and are

used in the operation of a business.

c. intangible assets that have a useful life of more than one accounting period and

are used in the operation of a business.

d. Tangible assets used in the operation of a business that have a useful life of less

than one accounting period.

26. Which of the following is not classified as plant assets?

a. Patent.

b. Land.

c. Land Improvements.

d. Machinery and Equipment.

27. A company purchased a tract of land for its natural resources at a cost of $1,714,000. It

expects to mine 2,080,000 tons of ore from this land. The salvage value of land is expected

to be $258,000. The depletion expense per ton of ore is:

a. $0.824.

b. $0.700.

c. $6.643.

d. $0.948.





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28. Gaston owns equipment that cost $15,500 with accumulated depreciation of $4,650.

Gaston sells the equipment for $9,800. Which of the following would not be part of the

journal entry to record disposal of equipment?

a. Debit Accumulated Depreciation $4,650.

b. Credit Gain on Disposal of Equipment $1,050.

c. Credit Equipment $15,500.

d. Debit Loss on Disposal of Equipment $1,050.

e. Debit Cash $9,800.

29. Peavey Enterprises purchased a depreciable asset for $22,500 on April 1, Year 1. The asset

will be depreciated using straight-line method over its four-year useful life. Assuming the

asset’s salvage value is $2,100. Peavey Enterprises should recognize depreciation expense

in Year 2 in the amount:

a. $5,100.

b. $4,250.

c. $19,550.

d. $20,400.

30. Granite Company purchased a machine costing $121,000, terms 2/10, n/30. The machine

was shipped FOB shipping point and fright charges were $2,100. The machine requires

special mounting and wiring connection costing $10,100. When installing the machine,

$1,600 in damages occurred. Compute the cost recorded for this machine assuming

Granite paid within the discount period.

a. $130.280.

b. $136,200.

c. $133,780.

d. $130.780.

31. Similar to land, land improvement are not subject to annual depreciation.

a) True.

b) False.

32. Depreciation expense is higher and income is lower in the short run when using

accelerated method of depreciation versus straight line methods.

a) True.

b) False.





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33. The assets book value is determined by deducting the residual value from its original cost.

a) True.

b) False.

34. The cost of land improvements includes fencing, paving, parking.

a) True.

b) False.

35. When a land is purchased, the cost of removing an existing old building is not added to the

land cost.

a) True.

b) False.

36. Land is the only asset that is not subject to annual depreciation.

a) True.

b) False.

37. According to the straight line depreciation method, a decreasing amount of depreciation

expense is calculated and recorded with each year of the assets useful life.

a) True.

b) False.

38. A plant assets useful life might not be the same as its productive life.

a) True.

b) False.

39. The total amount of depreciation expense over an assets useful life will be the same under

all methods of depreciation.

a) True.

b) False.

40. An accelerated depreciation methods yield smaller depreciation expense in early years of

an asset’s life and larger depreciation expense in later years.

a) True.

b) False.





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Chapter 11

1. The different between amount received from issuing a note payable and the amount

repaid at maturity us referred to:

A) Principle.

B) Cash.

C) Interest.

D) Face Value.

2. All of the following are true about know liabilities except:

A) Can arise from assignment or concerts.

B) Are measurable.

C) May depend on some future occurring.

D) Include accounts payable, note payables, and payroll.

3. Debt guarantees are:

A) Considered to be contingent liabilities.

B) Recorded as liabilities event though it is highly unlikely that the original debtor will

default.

C) Never disclosed in the financial statements.

D) A bad business practice.

4. Which of the following do not apply to unearned revenues?

A) Result from prepayments for concert tickets.

B) May also be called deferred revenues.

C) Amounts received in advance from customers for future delivery of products or

services.

D) Amounts to be received in future from customers for delivery of products or services

in the current period.

5. A company estimates that warranty expense will be 4% of sales. The company’s sales for

the current period are BD 185,000. The current period’s entry to record warranty expense

is:

A) No entry is recorded until the items are returned for warranty repairs.

B) Debit Warranty Expense BD 7,400; Credit Sales BD 7,400.

C) Debit Warranty Expense BD 7,400; Credit Estimated Warranty Liability BD 7,400.

D) Debit Estimated Warranty Liability BD 7,400; Credit Warranty Expense BD 7,400.





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6. Newcastle Company is required by law to collect and remit sales taxes to the

government. If Newcastle has $8,000 of cash sales that are subject to an 8% sales tax,

what is journal entry to record the cash sales?

A) Debit Cash $8,000; Credit Sales $8,000; and record taxes when paid.

B) Debit Cash $8,000; Credit Sales $7,360; Credit Sales Taxes Payable $640.

C) Debit Cash $7,360; Debit Sales Taxes Payable $640; Credit Sales $8,000.

D) Debit Cash $8,640; Credit Sales $8,000; Credit Sales Taxes Payable $640.

7. On December 1, Naya Company singed a 90-day, 6% note payable, with a face value of

BD 15,000. What amount of interest expense us accrued at December 31 on the note?

(Use 360 days a year.)

A) BD 75.

B) BD 0.

C) BD 225.

D) BD 300.

8. The interest on notes usually paid at the time of maturity with principal amount.

A. True.

B. False.

9. Liabilities not due within one year or the company’s operating cycle, whichever is longer,

are reported as current liabilities.

A. True.

B. False.

10. On November 1, Alan Company singed a 120-day, 8% note payable with a face value of

$9,000. What is the adjusting entry for record the accrued interest on December 31 on the

note? (Use 360 days a year.)

A. Debit Interest Expense, $720; Credit Interest Payable, $720.

B. No adjusting entry is required.

C. Debit Interest Expense, $120; Credit Interest Payable, $120.

D. Debit Interest Payable, $240; Credit Interest Payable, $240.

11. Obligation to be paid within one year or the company’s operating cycle, whichever is

longer, are:

A. Current Liability.

B. Non-Current Liability.

C. Current Assets.

D. Equity.





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12. On November 1, Alan Company singed a 120-day, 8% note payable with a face value of

$9,000. Alan made the appropriate year-end accrual. What is the journal entry as of

March 1 to record the payment of the note assuming no reversing entry was made? (Use

360 days a year.)

A. Debit Cash $9,240; Credit Notes Payable $9,240.

B. Debit Notes Payable $9,000; Debit Interest Expense $240; Credit Cash $9,240.

C. Debit Notes Payable $9,000; Debit Interest Payable $120; Credit Cash $9,120.

D. Debit Notes Payable $9,000; Debit Interest Payable $120; Debit Interest Expense

$120; Credit Cash $9,240.

13. Amounts received in advance from customers for future products or services:

a. Are liabilities.

b. Are revenues.

c. Require an outlay of cash in the future.

d. Are not allowed under GAAP.

14. Sales taxes payable is reported as a(n):

a. Contingent Liability.

b. Current Liability.

c. Estimated Liability.

d. Business Expense.

15. Contingent Liabilities are recorded or disclosed unless they are:

a. Remote (very unlikely).

b. Possible and estimable.

c. Reasonably possible.

d. Probable and estimable.

16. Estimated liabilities commonly arise from:

A. Warranties.

B. Vacation benefits.

C. Employee benefits.

D. All of these.

17. Accounts payable:

a. Are amounts owed to suppliers for products and/or services purchased on credit.

b. Are long-term liabilities.

c. Must be paid within 30 days.

d. Do not include specific due dates.





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18. If a company has advance ticket sales totaling $2,000,000 for the upcoming football

season, the receipt of cash would be journalized as:

a. Debit Sales, Credit Unearned Revenue.

b. Debit Unearned Revenue, Credit Sales.

c. Debit Cash, Credit Ticket Sales Payable.

d. Debit Cash, Credit Unearned Revenue.

19. During August, Box Company sells $353,000 in merchandise that has a one year warranty.

Experience shows that warranty expenses average about 4% of the selling price. The

warranty liability account has credit balance of $12,500 before adjustment. Customer

returned merchandise for warranty repairs during the month that used $9,100 in parts for

repairs. The entry to record the customer warranty repairs is:

a. Debit Estimated Warranty Liability $9,100, Credit Parts Inventory BD $9,100.

b. Debit Warranty Expense $10,720, Credit Estimated Warranty Liability $10,720.

c. Debit Warranty Expense $9,100, Credit Estimated Warranty Liability $9,100.

d. Debit Estimated Warranty Liability $14,120, Credit Parts Inventory BD $14,120.

20. On March 17th Grady Company agrees to accept a 60-day 10%, $4,500 note from Alert

Company to extend the due date on an overdue account. What is journal entry needed

to record the transaction by Alert Company?

a) Debit Notes payable $4,500; Credit Accounts payable $4,500.

b) Debit Accounts payable $4,500; Credit Notes payable $4,500.

c) Debit Accounts Receivable $4,500; Credit Notes payable $4,500.

d) Debit Cash $4,500; Credit Notes payable $4,500.

21. Advance ticket sales totaling 6,000,000 cash would be recorded as follows:

A. Debit unearned revenue, credit sales.

B. Debit unearned revenue, credit cash.

C. Debit cash, credit unearned revenue.

D. Debit sales, credit unearned revenue.

22. An estimated liability:

A. Is an unknown liability of a certain amount.

B. Is not recorded until the amount is known for certain.

C. Is a liability that may occur if a future event occurs.

D. Is a known obligation of an uncertain amount that can be reasonably estimated.





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23. Uncertainties such as natural disasters:

A. Are not contingent liabilities because they are future events not arising from past

transactions or events.

B. Should be disclosed because of their usefulness to financial statements.

C. Are estimated liabilities because the amounts are uncertain.

D. Are contingent liabilities because they are future events arising from past

transactions or events.

24. A note payable can be used to extend the payment due on an account payable.

a) True.

b) False.

25. A potential lawsuit claim is recorded when the claim can be reasonably estimated.

a) True.

b) False.

26. Debt guarantees are not usually disclosed as a contingent liability.

a) True.

b) False.

27. Uncertainties from the development of new competing products are contingent liabilities.

a) True.

b) False.

28. Trade accounts payable are amounts owed to suppliers for products or services

purchased on credit.

a) True.

b) False.

29. A contingent liability is a potential obligation that depends on a future event arising from

a future transaction or event.

a) True.

b) False.





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Chapter 12

1. In the partnership form of business, partners' salaries should be reported as expense on

the income statement.

a) True.

b) False.

2. When a partner withdraws and the partnership pays cash, the journal entry to include

his/her capital account in credit and cash account is debit.

a) True.

b) False.

3. When allocating profit or loss in a partnership, if there is no agreement, income or loss is

divided equally.

a) True.

b) False.

4. When a new partner is added to an existing partnership, the underlying business

operations must close and reopen.

a) True.

b) False.

5. In the partnership form of business, net income (or loss) is allocated to partners according

to partnership agreement.

a) True.

b) False.

6. Limited life is one characteristic of the partnership form of business.

a) True.

b) False.

7. The partner's capital account decreases by asset contributions and increases by

withdrawals.

a) True.

b) False.





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8. When partners invest in a partnership, their capital accounts are debited for the invested

amounts.

a) True.

b) False.

9. Voluntary association is one of the characteristics of a general partnership.

a) True.

b) False.

10. Salary allowances are always allocated equally among partners regardless of their

capital contributions or efforts.

a) True.

b) False.

11. Cash withdrawals of a partner are closed to Income Summary at end of period.

a) True.

b) False.

12. A partnership does not pay income tax however; each partner pays tax on his/her

income.

a) True.

b) False.

13. Forming a partnership requires at least three or more people to agree to be partners.

a) True.

b) False.

14. Partnership agreement or contract normally includes details such as the partners names,

contributions, and rights & duties of partners.

a) True.

b) False.

15. When creating a partnership. partners can invest cash ONLY in the partnership.

a) True.

b) False.





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16. Co-Ownership of partnership assets means that these assets are owned jointly by all

partners.

a) True.

b) False.

17. Any partner may be able to legally bind the partnership to a contract, a business or an

action even if he/she is not a manager.

a) True.

b) False.

18. In absence of an agreed ratio to allocate profit and loss, income and loss should be

allocated equally between partners.

a) True.

b) False.

19. Partners can agree to any method of dividing income or loss.

a) True.

b) False.

20. In partnerships, unlimited liability means that when a partnership cannot pay its debts,

creditors usually can take partners' personal assets.

a) True.

b) False.

21. Ali contributed 20,000 into the partnership of A&R. The journal entry to record this

transaction is: cash 20,000 Dr / A&R partnership 20,000 Cr.

a) True.

b) False.

22. When creating a partnership, assets and liabilities are recorded at their historical

(recorded) value not at market value.

a) True.

b) False.

23. The partnership agreement or contract must always be in a written form.

a) True.

b) False.





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24. Zayd and Omer become partners by investing BD 60,000 and BD 90,000 respectively. They

decided to share profit and loss 40% to Zayed and 60% to Omer. They also allowed to

have annual salary allowance for BD 50,000 to Zayed and BD 40,000 to Omer. Business

also allow them 10% interest on their investments amount and the remaining balance

shared as per the agreement.

What is the amount share of Omer if the year income BD 98,800?

A. BD 45,280.

B. BD 45,900.

C. BD 53,520.

D. BD 52,900.

25. Brothers Partnership allows Hamad to sell his BD 190,000 equity in the partnership to

Salman. Salman pays to Hamed BD 280,000. What is the correct journal entry to record sell

of interest?

A.

B.

C. No Entry.

D.

26. Zulfiqar and Omer become partners by investing BD 60,000 and BD 90,000 respectively.

They decided to share profit and loss equally. They also allowed to have annual salary

allowance for BD 50,000 to Zayed and BD 40,000 to Omer. Business also allow them 10%

interest on their investments amount and the remaining balance shared as per the

agreement.

What is total share of Omer if the year LOSS BD 16,800.

A. BD 4,900.

B. BD (11,900).

C. BD (4,900).

D. BD 11,900.

190,000 Hamad Capital – Debit

190,000 Salman Capital - Credit

280,000 Hamad Capital – Debit

280,000 Salman Capital - Credit

190,000 Salman Capital – Debit

190,000 Hamad Capital - Credit





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27. Huda, Lulwa, and Ghada are dissolving their partnership. Their partnership agreement

allocates each partner 1/3 of all income and losses. The current period’s ending capital

account balances are Huda, BD 45,000; Lulwa, BD 37,000; and Ghada, BD(5,000). After all

assets are sold and liabilities are paid, there is BD 77,000 in cash to be distributed. Ghada

is unable to pay the deficiency. What amount of cash will Ghada receive upon

liquidation?

A) BD 0.

B) BD 30,667.

C) BD 20,667.

D) BD 25,667.

28. Ahmed and Bader are forming partnership. Ahmed will invest in building that currently is

being used by another business owned by Ahmed. The building has a market value of BD

80,000. Also, the partnership will assume responsibility for a BD 20,000 note secured by

mortgage on that building. Bader will invest BD 50,000 cash. For the partnership, the

amounts to be recorded for the building and for Ahmed’s Capital account are:

A) Building, BD 60,000 and Ahmed Capital, 50,000.

B) Building, BD 60,000 and Ahmed Capital, 60,000.

C) Building, BD 80,000 and Ahmed Capital, 80,000.

D) Building, BD 80,000 and Ahmed Capital, 60,000.

29. Wedad, Dana and Sana formed a partnership. Wedad contributing BD 60,000, Dana

contributing BD 50,000 and Sana contributing BD 40,000. Their partnership called for

income (loss) division to be based on the ratio of capital investment. If the partnership

had income of BD 75,000 for its first year of operation, what amount of income would be

credited to Sana’s capital account?

A) BD 25,000.

B) BD 75,000.

C) BD 20,000.

D) BD 40,000.

30. A bonus may be paid in all the following situations except:

a. To a new partner with exceptional talents.

b. By a new partner when the current value of a partnership is greater than the

recorded amount of equity.

c. By an existing partner to him or herself when in need to personal cash flow.

d. By remaining partners to a withdrawing partner if the recorded equity is understated.

e. By a withdrawing partner to remaining partners if the recorded equity is overstated.





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31. Characteristics of a general partnership include all of the following except:

A. A corporate business income tax.

B. Limited life.

C. Mutual Agency.

D. Unlimited life.

32. When a partner is unable to pay a capital deficiency:

A) The remaining partners must wait for the deficiency to paid before cash is

distributed.

B) The different partner is relieved of the liability.

C) The deficiency is absorbed by the remaining partners.

D) The partner must take a loan to cover the difference balance.

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