ACC 100 Unit 4 Challenges Sophia

Unit 4 Challenge 1

Libby is considering selling cupcakes from a food truck and began to think about the equipment she would need to run a food truck.

Determine which of the following would be a long-term asset.

·        A.)

Propane for generator

·        B.)

Baking ingredients

·        C.)

Mixers

·        D.)

Hats

Barbara is considering selling pierogies from a food truck and began to think about the equipment she would need to run a food truck.

Determine which of the following would be a short-term asset.

·        A.)

Frying pans

·        B.)

Cooling racks

·        C.)

Oven

·        D.)

Aprons

Joseph is considering selling tacos from a food truck and began to think about the equipment he would need to run a food truck.

Determine which of the following would be a short-term asset.

·        A.)

Refrigerator

·        B.)

Stove

·        C.)

Workers' t-shirts

·        D.)

Food truck

Tommy began a list of the additional equipment he would need to run the food truck for his company, Tommy's Tacos.  He would need a cell phone to make transactions, several tables and chairs to set out in front of the truck, the Tommy's Tacos trademark to be logo-wrapped on the truck and a stove to fry the tortillas.

Which of the following assets is NOT depreciable?

·        A.)

Stove

·        B.)

Cell phone

·        C.)

Store tables and chairs

·        D.)

Trademark wrapping

Ann began a list of the additional equipment she would need to run the food truck for her company, Sweet Tooth. She would need mixers that fit on the truck, baking ingredients that were stable in the summer heat, a rented parking space downtown on Foodtruck Row, and of course, the food truck.

Which of the following assets is NOT depreciable?

·        A.)

Mixers

·        B.)

Food truck

·        C.)

Baking ingredients

·        D.)

Property on which store is located

Sarah began a list of the additional equipment she would need to run the food truck for her company, The Modern Bite. She would need a cash register system to make transactions, cooling racks, a car to shuttle ingredients over to the truck as needed and new aprons.

Which of the following assets is NOT depreciable?

·        A.)

Cash register system

·        B.)

Aprons

·        C.)

Car

·        D.)

Cooling racks

Trevor calculated the depreciation of the food truck he purchased for $36,000. He would use the truck to sell burritos throughout the summer and decided that the useful life of the truck was seven years. Trevor also determined the residual value of the truck to be $1,000.

Trevor calculated the annual straight line depreciation of the truck to be __________.

·        A.)

$5,143

·        B.)

$5,000

·        C.)

$5,300

·        D.)

$5,286

Kathy calculated the depreciation of the car she purchased for $35,000. She decided that the useful life of the car was 10 years. Kathy also determined the residual value of the car to be $500.

Kathy calculated the annual straight line depreciation of the car to be __________.

·        A.)

$3,000

·        B.)

$3,500

·        C.)

$2,500

·        D.)

$3,450

Paul wanted to calculate the depreciation of the computer server his company purchased for $6,000. He decided that the useful life of the server would be three years. Paul also determined that the residual value of the server would be $300.

Paul calculated the annual straight line depreciation of the server would be __________.

·        A.)

$1,800

·        B.)

$1,900

·        C.)

$2,100

·        D.)

$2,000

The machine that was used to produce textbooks cost $600,000 when it was purchased new one year ago. It has an expected life span of five years. The income statement showed the straight line deprecation rate as 5%.

 

Using double declining balance depreciation, the book value of the machine at the end of year two will be __________.

• A.)

$540,000

• B.)

$426,000

• C.)

$360,000

• D.)

$486,000

The machine that was used to produce notebooks cost $750,000 when it was purchased new one year ago. It has an expected life span of 10 years. The income statement showed the straight line deprecation rate as 10%.

 

Using double declining balance depreciation, the book value of the machine at the end of year two is __________.

• A.)

$600,000

• B.)

$150,000

• C.)

$330,000

• D.)

$480,000

The machine used to produce color copies cost $250,000 when it was purchased new one year ago. It has an expected life span of five years. The income statement showed the straight line deprecation rate as 20%.

 

Using the double declining balance depreciation method, the book value of the color copy machine at the end of year two will be __________.

• A.)

$90,000

• B.)

$150,000

• C.)

$100,000

• D.)

$60,000

Consider the following information for a machine:

Cost = $14,000
Residual Value = $2,000
Useful Live = 5 years

Using straight line depreciation, what would the depreciation be after 18 months?

·        A.)

$200

·        B.)

$1,800

·        C.)

$660

·        D.)

$3,600

Consider the following information for a machine:

Cost = $15,000
Residual Value = $3,000
Useful Live = 5 years

Using straight line depreciation, what would the monthly amount of depreciation be?

·        A.)

$2,400

·        B.)

$1,200

·        C.)

$200

·        D.)

$300

Consider the following information for a machine:

Cost = $20,000
Estimated life = 5 years
Straight line depreciation = 10%

Using the double declining balance method, determine the book value at the end of Year 1 and Year 2.

·        A.)

End of Year one = $18,000
End of Year two = $14,200

·        B.)

End of Year one = $18,000
End of Year two = $16,200

·        C.)

End of Year one = $16,000
End of Year two = $8,800

·        D.)

End of Year one = $16,000
End of Year two = $12,800

LONG TERM ASSET
ASSET: TRACTOR

 

Based on the information above, the book value of the tractor is __________.

• A.)

$33,000

• B.)

$25,000

• C.)

$28,000

• D.)

$43,000

LONG TERM ASSET
ASSET: FOOD TRUCK

 

Based on the information above, the book value of the food truck is __________.

• A.)

$28,400

• B.)

$25,650

• C.)

$44,350

• D.)

$31,150

LONG TERM ASSET
ASSET: PALLET TRUCK

 

Based on the information above, the book value of the pallet truck is __________.

• A.)

$35,000

• B.)

$30,000

• C.)

$20,000

• D.)

$25,000

LONG TERM ASSET
ASSET: FOOD TRUCK

 

Based on the information above, the book value of the food truck is __________.

• A.)

$28,400

• B.)

$25,650

• C.)

$44,350

• D.)

$31,150

LONG TERM ASSET
ASSET: PALLET TRUCK

 

Based on the information above, the book value of the pallet truck is __________.

• A.)

$35,000

• B.)

$30,000

• C.)

$20,000

• D.)

$25,000

Peter's company has decided to sell their forklift. The market value of the forklift is $35,000. He predicts that the book value is $30,000.

Given this information, which of the following is true?

·        A.)

Peter would record a loss for the sale of the forklift in the amount of $30,000.

·        B.)

Peter would record a gain for the sale of the forklift in the amount of $30,000.

·        C.)

Peter would record a loss for the sale of the forklift in the amount of $5,000.

·        D.)

Peter would record a gain for the sale of the forklift in the amount of $5,000.

The asset account and any accumulated depreciation must be removed from the books by ____________.

·        A.)

crediting the asset and crediting the depreciation

·        B.)

crediting the asset and debiting the depreciation

·        C.)

debiting the asset and crediting the depreciation

·        D.)

debiting the asset and debiting the depreciation

A gain or loss may be incurred if the sale or trade of an asset is greater than or less than the __________ value of the asset.

·        A.)

cash

·        B.)

cost average

·        C.)

carrying

·        D.)

depreciation

Unit 4 Challenge 2

Which of the following transactions indicates a purchase allowance?

·        A.)

Several rope slings arrived with frayed ends. Pat agreed to keep them for a 25% discount.

·        B.)

Pat sent back a set of Kinkajou cages because they were not the proper size.

·        C.)

The Pet Hotel returned a shipment of dog beds that were the wrong size and received a refund.

·        D.)

Because they arrived dented, Pat refused an order of food bowls at delivery.

Accounts payable is an account which contains the total dollar value of __________ by the business for all __________ purchases.

·        A.)

monies owed to the suppliers; cash

·        B.)

monies customers owe; credit

·        C.)

monies customers owe; cash

·        D.)

monies owed to the suppliers; credit

 

Which of the following transactions indicates a purchase return?

·        A.)

The Pet Hotel received a free order of cat treats after the first order was the wrong flavor.

·        B.)

The Pet Hotel kept an incorrect order of ferret food and the manufacturer credited their account.

·        C.)

The Pet Hotel received an order of crickets that arrived dead so the supplier sent another order at no charge.

·        D.)

The Pet Hotel received a refund for the box of chew toys they sent back due to poor quality.

Which of the following events corresponds with a sales return?

·        A.)

The Furry Place returned bagged rabbit food to the supplier because it was the wrong flavor.

·        B.)

Due to an extra shipment, The Furry Place had a special this week on kitty litter.

·        C.)

A customer traveling abroad for the next month paid cash for his snake to stay at the The Furry Place while he’s gone.

·        D.)

The Furry Place gave a customer $25 back after she returned a defective dog leash.

Which of the following events corresponds with a sales return?

·        A.)

Ian gave a customer a 20% discount on a marmoset cage.

·        B.)

Ian sent a specialty cage supplier a payment on account.

·        C.)

After suffering the loss of her fennec fox, Ian agreed to buy back his customer's unused litter.

·        D.)

Ian had a sale on prairie dog food: Buy one, get one half off.

Which of the following events corresponds with a sales allowance?

·        A.)

A customer returned a hamster wheel to The Furry Place because the spokes were broken.

·        B.)

The Furry Place was selling ferret food at half off because of excess inventory.

·        C.)

The Furry Place sent back a shipment of cedar chips because the packages were the wrong size.

·        D.)

A frequent customer paid cash in advance for her hamster’s three-day stay the next week.

Select the true statement about the allowance method of accounting for bad debts.

·        A.)

It follows the matching principle.

·        B.)

It is the less-preferred method for financial reporting purposes.

·        C.)

It directly credits accounts receivable.

·        D.)

It focuses on customers with credit and cash accounts.

Select the true statement about the allowance method of accounting for bad debts.

·        A.)

It is not required for financial reporting.

·        B.)

It directly credits accounts receivable.

·        C.)

It focuses only on customers with credit accounts.

·        D.)

It includes uncollected cash sales.

Suppose during the year, $100 is written off because we are assuming it will not be paid. 

Using the direct write-off method, we will __________.

·        A.)

credit Allowance for Bad Debt $100 and debit Allowance for Bad Debt $100

·        B.)

credit Allowance for Bad Debt $100 and debit Account Receivable subsidiary ledger $100

·        C.)

debit Allowance for Bad Debt $100 and credit Allowance for Bad Debt $100

·        D.)

debit Allowance for Bad Debt $100 and credit Account Receivable subsidiary ledger $100

Susan found that Accounts Receivable had a balance of $500,820 and calculated that 5% of receivables were uncollectible.

Based on this information, __________ is the allowance for bad debt.

·        A.)

$47,578

·        B.)

$25,041

·        C.)

$52,586

·        D.)

$10,016

Using the information above, the percent of receivables is __________.

·        A.)

14%

·        B.)

7%

·        C.)

2%

·        D.)

93%

 

Using the information above, the percent of receivables is __________.

• A.)

2%

• B.)

6%

• C.)

10%

• D.)

17%

 

Using the aging schedule above, which of the following is the total uncollectible amount?

• A.)

$2,749

• B.)

$2,253

• C.)

$3,757

• D.)

$2,512

 

Using the aging schedule above, which of the following is the total uncollectible amount?

• A.)

$2,075

• B.)

$3,480

• C.)

$4,325

• D.)

$17,880

 

Based on the above aging schedule, what amount would be recorded in accounts receivable at 31-60 days?

• A.)

$159,660

• B.)

$97,200

• C.)

$120,000

• D.)

$129,330

Which of the following statements is true when using the aging method?

·        A.)

Each account receivable is categorized according to how much is owed.

·        B.)

Each account receivable is categorized according to how long it has been outstanding or past due.

·        C.)

Each account payable is categorized according to how much is owed.

·        D.)

Each account payable is categorized according to how long it has been outstanding or past due.

Which of the following statements is true when using the percentage of net credit sales method?

·        A.)

This method is estimating a percent of cash sales made for which payment will not be counted.

·        B.)

This method is estimating a percent of credit sales made for which payment will not be collectible.

·        C.)

This method is determining the actual dollar value of credit sales made for which payment will not be collectible.

·        D.)

This method is estimating a percent of sales made for which payment will not be collectible.

Which of the following statements is true when calculating the percentage of receivables?

·        A.)

The percentage is of the net sales balance.

·        B.)

The percentage is of the accounts payable balance.

·        C.)

The percentage is of the accounts receivable balance.

·        D.)

The percentage is of the uncollected accounts receivable balance.

Unit 4 Challenge 3

Which of the following statements is true regarding contingent liabilities?

·        A.)

All contingent liabilities are recorded with a journal entry.

·        B.)

A contingent liability is recorded with a journal entry only if the contingency is both probable and the amount can be estimated.

·        C.)

A contingent liability is recorded with a journal entry if the contingency is both possible  and the amount can be estimated.

·        D.)

A contingent liability is recorded with a journal entry if the contingency is the possibility is remote.

Which of the following descriptions is true of sales tax payable?

·        A.)

Sales tax is a percentage of sales owed to the state collected from the customer by the company and paid to the government by the company.

·        B.)

Sales tax is a percentage of income owed to the state collected from the customer by the company.

·        C.)

Sales is the amount owed to the company collected from the customer by the company.

·        D.)

Sales is the amount owed to the state collected from the customer by the company and paid to the government by the company.

 

Which of the following transactions is NOT a contingent liability?

·        A.)

A customer has filed a lawsuit for negligence against Mark's company.

·        B.)

The state alleges that Mark underpaid his taxes last year.

·        C.)

Mark has hired an internal auditor.

·        D.)

A customer has approached Mark regarding an issue with the product warranty.

Libby secured a three-month loan at an interest rate of 4.5% and borrowed $25,000 to purchase a truck.

When the loan matures, Ann will pay ________ in interest to the bank.

·        A.)

$1,125.00

·        B.)

$393.75

·        C.)

$281.25

·        D.)

$1,575.00

Elizabeth secured a three-month loan at an interest rate of 4.5% and borrowed $10,000 to purchase an oven.

When the loan matures, Elizabeth will pay ________ in interest to the bank.

·        A.)

$135.00

·        B.)

$54.00

·        C.)

$112.50

·        D.)

$61.73.00

Tori secured a two-month loan at an interest rate of 2.9% and borrowed $15,000 to purchase a refrigerator.

When the loan matures, Tori will pay ________ in interest to the bank.

·        A.)

$52.20

·        B.)

$72.50

·        C.)

$261.00

·        D.)

$87.00

Based on the vertical analysis of the balance sheet above, the balance of total assets is __________.

·        A.)

$490,000

·        B.)

$441,000

·        C.)

$700,000

·        D.)

$70,000

Based on the vertical analysis of the balance sheet above, the balance of total assets is __________.

·        A.)

$500,000

·        B.)

$150,000

·        C.)

$450,000

·        D.)

$95,000

Based on the vertical analysis of the balance sheet above, the balance of total assets is __________.

·        A.)

$450,000

·        B.)

$395,000

·        C.)

$324,450

·        D.)

$194,450

Given the information shown here, what is the rate of return on sales?

·        A.)

2.52

·        B.)

0.06

·        C.)

0.07

·        D.)

2.09

Using the information shown here, which of the following is the asset turnover ratio?

·        A.)

0.11

·        B.)

0.15

·        C.)

1.81

·        D.)

1.32

Given the information shown here, which of the following is the current ratio?

·        A.)

2.71

·        B.)

0.14

·        C.)

2.00

·        D.)

0.07

Which of the following descriptions corresponds with ratio analysis?

·        A.)

Item can be expressed as a percentage of total assets.

·        B.)

Owner’s equity and liabilities are used in calculations.

·        C.)

This evaluates financial statements for two or more periods.

·        D.)

This is used to calculate rate of return on sales.

_____ analysis allows the company to evaluate changes within the company and compare to other companies and industry standards.

·        A.)

Liquidity

·        B.)

Vertical

·        C.)

Profitability

·        D.)

Ratio

Which of the following ratio analysis methods is a liquidity ratio?

·        A.)

Rate of Return on Sales

·        B.)

Inventory turnover

·        C.)

Return on Total Assets

·        D.)

Asset turnover

Which of the following scenarios is an operating activity?

·        A.)

The Tasty Treat recorded $2,500 in expenses last quarter.

·        B.)

The Burger Place currently has a $1,800 credit on their account with their food supplier.

·        C.)

The Shear Talent paid the bank $750 toward the principle of the mortgage loan.

·        D.)

Pat received $900 in cash paid to him as an owner drawing.

Which of the following scenarios is an investing activity?

·        A.)

Peter received $15,000 cash to pay for the skylight.

·        B.)

Peter received $1,00 in cash paid to him as an owner drawing.

·        C.)

Peter made a downpayment of $20,000 on the purchase the property next door.

·        D.)

Peter recorded a profit of $10,200 for June on the income statement.

Which of the following scenarios is a financing activity?

·        A.)

$5,670 recorded as profit for June documented on the income statement

·        B.)

$2,000 received from the bank to aid in the purchase of the building

·        C.)

An observation that, on average, customers return $570 worth of merchandise each month

·        D.)

Purchase of the building next to the Paisley Place for $25,000 to be used for expansion

The ending cash balance on the Statement of Cash Flows should be equal to the balance of the cash account listed on the __________.

·        A.)

statement of changes in owner's equity

·        B.)

balance sheet

·        C.)

income statement

·        D.)

statement of operating activities

Kyle recorded profits for the last three months in the amount of $8,900. He also included the $1,000 he took out of the business for personal use.

$1,000 would be listed as __________ and found in the financing activities.

·        A.)

a revenue adjustment

·        B.)

cash flow

·        C.)

cash balance

·        D.)

an owner's draw

Sarah recorded profits for the last three months in the amount of $9,700. She also included the $1,200 she took out of the business for personal use.

$9,700 would be listed as __________ and found in the operating activities.

·        A.)

net income

·        B.)

beginning cash balance

·        C.)

cash flow

·        D.)

ending cash balance

The accountant who performed the monthly bank reconciliation could not be the same person who approved new vendors.

Which of the following internal control systems is being used in this scenario?

·        A.)

Risk assessment

·        B.)

Control activities

·        C.)

Control environment

·        D.)

Monitoring processes

Paperclips has just acquired Office Space, so Ned wanted to inform the employees that they were no longer Office Space employees but Paperclips employees. As new Paperclips employees, Ned also wanted to make sure that everyone was familiar with the internal controls he employs.

Each employee was given an employee handbook, which included Paperclips' Mission Statement, in order to educate the new employees about the merged company's policies and procedures.

Which of the following internal control systems is being used in this scenario?

·        A.)

Risk assessment

·        B.)

Monitoring processes

·        C.)

Control activities

·        D.)

Control environment

The sales department was asked to prepare a weekly report on customer returns to make sure that the reason for each return was legitimate.

Which of the following internal control systems is being used in this scenario?

·        A.)

Control environment

·        B.)

Monitoring processes

·        C.)

Risk assessment

·        D.)

Control activities

 

 

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ACC----------- 10-----------0 U-----------nit----------- 4 -----------Cha-----------lle-----------nge-----------s S-----------oph-----------ia-----------

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