Acc212- chapter 3+4

1.   Al Raja Company purchased a new machine at BD35,000.  The company paid BD1,500 for shipping and taxing, and BD500 for installation and also paid BD1,000 for advertising.  What is the acquisition cost of machine?

• a. BD38,000

• a. BD37,000

• a. BD36,500

• a. BD37,500

1.   ABC Company acquires a truck at BD20,000.  The truck expected to have salvage value of BD5,000 at the end of 5 years useful life.  How much is the Depreciation Base?

• a. BD25,000

• a. BD15,000

• a. BD5,000

• a. BD3,000

1.   An equipment was bought on January1, 2017 at a total cost of BD40,000.  The estimated scrap value is BD8,000 and useful life is 4 years.  What is the amount of Accumulated Depreciation on December 31, 2019 using the Straight Line Method?

• a. BD8,000

• a. BD24,000

• a. BD12,000

• a. BD10,666.670

  On Dec, 31 2020, Mariam Company estimated that 5% will be uncollectible under Income Statement Approach. The company records show credit sales BD100,000, Account receivables BD70,000,and provision for doubtful account Debit Balance of BD500.

The Estimated Amount of Allowance for doubtful debts is:

• a. BD4,000

• a. BD4,500

• a. BD5,000

• a. BD3,500

1.   A motor van costs BD45,000, the residual value BD4,000, estimated useful life 10 years.  The depreciation rate by using double declining method is:

• a.   50%

• a.   11.25%

• a.   10%

• a.   20%

6.   This Depreciation Method is generally suitable for Manufacturing Companies:

• a.   Double Declining Method

• a.   Straight line Method

• a.   Units of Activity Method

• a.   Direct Write off Method

7.   An equipment was purchased for BD140,000.  This Equipment is estimated to have 5 years and a salvage value of BD20,000.  The journal entry for the second year using the Double Declining Method will be:

 

• Dr.Depreciation Expense-Equipment                 56,000

        Cr.Accumulated Depreciation-Equipment            56,000

• Dr.Depreciation Expense-Equipment                 33,600

        Cr.Accumulated Depreciation-Equipment            33,600

• Dr. Accumulated Depreciation-Equipment           56,000

         Dr. Depreciation Expense-Equipment                 56,000

• Dr.Accumulated Depreciation-Equipment           33,600

         Cr.Depreciation Expense-Equipment                  33,600

8.   All the following is considered as advantages of credit cards, except

• Mounting Debts

• Purchasing Power

•   Convenience

• Rewards

9.   The company delete the Debts from records when one of its debtors cannot pay the amount due -- In accounting, we call it

• Write off

• Recovery

• Estimation

•    Bankruptcy