AC331_Review

What of this is NOT a rule for adjusting journal entries

• 1. Debits equal credits

• 1. Cash account is never used

• 1. There is at least one income statement and one balance sheet account

• 1. Will always reduce net income

What of the following accounts will NOT be closed in the process of closing

• Sales Revenue

• Interest Receivable

• Interest Income

• Cost of goods sold

If a business prepays 12 months insurance on Oct 1; how many months insurance cost should be expensed as of Dec 31

• 1. 12 months

• 1. 3 months

• 1. 9 months

• 1. 2 months

Depreciation expense is always accounted as

• 1. Debit Depreciation Expense, Credit Accumulated Depreciation

• 1. Debit Accumulated Depreciation, Credit Depreciation Expense

• 1. Debit Depreciation Expense, Credit Property, Plant & Equipment

• 1. Debit Property, Plant & Equipment, Credit Depreciation Expense

Alpha Incorporated has $45,000 debit balance in dividend account and $80,000 credit balance in Retained Earnings account before closing dividends.  After closing dividends, the balance in Retained Earnings is:

• 1. $35,000 credit

• 1. $125,000 credit

• 1. $35,000 debit

• 1. $125,000 debit

Working capital is defined as current assets less current liabilities. Which of the following will NOT be considered in the working capital calculation

• 1. Interest receivable in 6 months

• 1. Short term investments maturing in 9 months

• Investments that not intended for sale in the next 12 months

• Unearned revenue that will be earned equally over the next 4 months

How will depreciation expense and gain on sale of investments be adjusted in the cash flow statement (cash flows from operating activities)

• 1. Both will be added to Net Income

• 1. Both will be deducted from Net Income

• 1. Depreciation will be deducted; Gain will be added

• 1. Depreciation will be added; Gain will be deducted  

In order to compute the present value of future annual cost savings that are expected to be realized at the end of each year, which of the following factors have to be used

• 1. Present value of an ordinary annuity

• 1. Present value of an annuity due

• 1. Present value of a single sum

• 1. Future value of an ordinary annuity

In order to determine the price of a bond issued for 10 years with a market interest rate of 7% and coupon rate of 8%, interest payable semi annually, you will use the present value factor of:

• 1. i = 7.0%; n = 10

• 1. i = 4.0%; n = 20

• 1. i = 3.5%; n = 20

• 1. i = 8.0%; n = 10

How much revenue is recognized in the year ending Dec 31, 2023 on the sale of a ski pass on Oct 1, 2023 for $1,200. The pass is valid from Jan 1, 2024 to May 31, 2024 and is expected to be used evenly each month

• $1,200

• 0

• $300

• $900