Study Guides (390,000)
CA (150,000)
McMaster (9,000)
COMMERCE (1,000)
All (10)
Final

COMMERCE 1AA3 Study Guide - Final Guide: Accounts Payable, Promissory Note, Current LiabilityExam


Department
Commerce
Course Code
COMMERCE 1AA3
Professor
All
Study Guide
Final

This preview shows pages 1-3. to view the full 17 pages of the document.
Page 1
Name: Date:
1. A change in estimate should
A) result in restatement of prior period statements.
B) be handled in current and future periods.
C) be handled in future periods only.
D) be handled retroactively.
2. The sale of a depreciable asset resulting in a loss indicates that the proceeds from the
sale were
A) less than current market value
B) less than cost.
C) greater than book value.
D) less than book value.
3. Driesell Corp. has been in existence several years. The current year's balance sheet of
Driesell Corp. would show
A) The amount of cash Driesell Corp. received during the current year.
B) The amount of cash sales that were made by Driesell Corp. during the current year.
C) The amount of cash Driesell Corp. has as of a certain date.
D) The excess of the amount of Driesell Corp.'s cash receipts over its cash
disbursements in the current year.
4. On the last day of the accounting period, XYZ Co. received a utility bill for electricity
consumed during the current period. XYZ will pay the bill after two weeks. XYZ
should
A) debit utilities expense and credit accounts receivable.
B) debit utilities expense and credit accounts payable.
C) debit accounts payable and credit utilities expense.
D) make no entry until the bill is paid.
5. Most companies pay current liabilities
A) out of current assets.
B) by issuing interest-bearing notes payable.
C) by issuing shares.
D) by creating long-term liabilities.
Final Exam Practice - 2007 Fall

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Page 2
Use the following to answer questions 6-7:
Pierce Co. purchased land as a factory site for $500,000. Pierce paid $20,000 to tear down two
buildings on the land. Salvage was sold for $2,700. Legal fees of $1,740 were paid for title
investigation and making the purchase. Architect's fees were $20,600. Title insurance cost
$1,200, and liability insurance during construction cost $1,300. Excavation cost $5,220. The
contractor was paid $1,200,000. An assessment made by the city for pavement was $3,200.
Interest costs during construction were $85,000.
6. The cost of the land that should be recorded by Pierce Co. is
A)
$520,240
B)
$523,440
C)
$524,940
D)
$528,140
7. The cost of the building that should be recorded by Pierce Co. is
A)
$1,306,900.
B)
$1,307,420.
C)
$1,311,600.
D)
$1,312,120.
8. A graph is set up with "yearly amortization expense" on the vertical axis and "time" on
the horizontal axis. Assuming linear relationships, how would the graphs for
straight-line and declining-balance amortization, respectively, be drawn?
A) Vertically and sloping down to the right.
B) Vertically and sloping up to the right.
C) Horizontally and sloping down to the right.
D) Horizontally and sloping up to the right.
9. Jantz Corporation purchased a machine on July 1, 2003, for $250,000. The machine was
estimated to have a useful life of 10 years with an estimated residual value of $14,000.
During 2006, it became apparent that the machine would become uneconomical after
December 31, 2010, and that the machine would have no salvage value. Accumulated
amortization on this machine as of December 31, 2005, was $59,000. What should be
the charge for amortization in 2006 under generally accepted accounting principles?
A) $35,400.
B) $38,200.
C) $41,000.
D) $47,750.

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Page 3
10. Jeter Company purchased a new machine on May 1, 1997 for $132,000. At the time
of acquisition, the machine was estimated to have a useful life of ten years and an
estimated residual value of $6,000. The company has recorded monthly amortization
using the straight-line method. On March 1, 2006, the machine was sold for $18,000.
What should be the loss recognized from the sale of the machine?
A)
$0.
B)
$2,700.
C)
$6,000.
D)
$8,700.
Use the following to answer questions 11-12:
The Glory Corp issued bonds of $5,000,000 with a 20-year maturity and a 5% face rate of
interest, paid semiannually. The market rate of interest is 8%. The bonds were issued for
$3,515,600.
11. What is the periodic interest payment?
A)
B)
C)
D)
12. What is the interest expense in the first year?
A)
$281,873.
B)
$400,000.
C)
$281,243.
D)
$250,000.
Use the following to answer questions 13-14:
You and your classmate are reading The Wall Street Journal and find the following information
on tax-exempt bonds.
Bond Issue Coupon Rate Price Yield (Market Rate)
Hamilton Airport 5.600 98.125 5.73
Hamilton Utilities 6.500 105.675 5.85
13. Which of the following conclusions can you make from the above information?
A) The Hamilton Airport bonds are selling at a premium since the yield (market rate) is
greater than the coupon (face rate).
B) The Hamilton Utilities bonds are selling at a discount since the yield (market rate)
is less than coupon (face rate).
C) The Hamilton Utilities bonds are selling at a discount since the price of the bond is
105 5/8.
D) The Hamilton Airport bonds are selling at a discount since the yield (market rate) is
greater than the coupon (face rate).
You're Reading a Preview

Unlock to view full version