Bus321 - Missed/Iffy Questions from Practice Final Exam

68) The cost of self-constructed fixed assets should: A) Include allocated indirect costs just as they are for production of products. B) Include only specifically identifiable indirect costs. C) Include only incremental indirect costs. D) Not include indirect costs.

A) Include allocated indirect costs just as they are for production of products.

62) Assets acquired under multi-year deferred payment contracts are: A) Valued at the present value of the payments required by the contract. B) Valued at their fair value on the date of the final payment. C) Valued at the sum of the payments required by the contract. D) None of these answer choices are correct.

A) Valued at the present value of the payments required by the contract.

36) In the balance sheet at the end of its first year of operations, Dinty Inc. reported an allowance for uncollectible accounts of $82,900. During the year, Dinty wrote off $30,400 of accounts receivable it had attempted to collect and failed. Credit sales for the year were $2,340,000, and cash collections from credit customers totaled $1,840,000. What bad debt expense would Dinty report in its first-year income statement? A) $82,900. B) $113,300. C) $52,500. D) Can't be determined from the given information.

B) $113,300. Dinty wrote off 30,400 during the year and reported 82,900 on their balance sheet. The initial balance of allowance for doubtful accounts would have been 113,300 (30,400 written off plus the 82,900 remaining balance). Therefore, the bad debt expense they would have accounted for would have been 113,300.

21) Howard Inc. had prepaid rent of$89,000 and $100,000 at the end of 2017 and 2018, respectively. During 2018, Howard recorded $254,000 in rent expense in its income statement. Cash outflows for rent in 2018 were: A) $254,000. B) $265,000. C) $243,000. D) $276,000.

B) $265,000. Ending Balance plus expenditures minus beginning balance = cash outflows 100,000 + 254,000 - 89,000 = 265,000

66) Interest is not capitalized for: A) Assets constructed for a company's own use. B) Inventories routinely and repetitively produced in large quantities. C) Assets that are constructed as discrete projects for sale or lease. D) Interest is capitalized for all of these items.

B) Inventories routinely and repetitively produced in large quantities.

67) Average accumulated expenditures: A) Is computed as a simple average if all construction expenditures are made at the end of the period. B) Is an approximation of the average debt a firm would have outstanding if it financed all construction through debt. C) Are irrelevant if the company's total outstanding debt is less than total costs of construction. D) All of these answer choices are true statements.

B) Is an approximation of the average debt a firm would have outstanding if it financed all construction through debt.

39) Ending inventory is equal to the cost of items on hand plus: A) Purchases in transit f.o.b. destination. B) Items in transit sold f.o.b. destination. C) Items in transit sold f.o.b. shipping point. D) None of these answer choices is correct.

B) Items in transit sold f.o.b. destination. this is from the SELLERS perspective

37) In the balance sheet at the end of its first year of operations, Dinty Inc. reported an allowance for uncollectible accounts of $82,100. During the year, Dinty wrote off $30,300 of accounts receivable it had attempted to collect and failed. Credit sales for the year were $2,320,000, and cash collections from credit customers totaled $1,910,000. What accounts receivable balance would Dinty report in its first year-end balance sheet? A) $358,200. B) $327,900. C) $379,700. D) None of these answer choices are correct.

C) $379,700. Subtract cash collected from sales totals and then subtract the amount written off. 2,320,000 - 1,910,000 = 410,000 - 30,300 = 379,700

60) Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $420,000. Shipping costs totaled $15,000. Foundation work to house the centrifuge cost $8,000. An additional water line had to be run to the equipment at a cost of $3,000. Labor and testing costs totaled $6,000. Materials used up in testing cost $3,000. The capitalized cost is: A) $435,000. B) $437,000. C) $455,000. D) $446,000.

C) $455,000. Costs that would not be included would be: ..... ?

38) As of January 1, 2018, Farley Co. had a credit balance of $520,000 in its allowance for uncollectible accounts. Based on experience, I% of Farley's credit sales have been uncollectible. During 2018, Farley wrote off $638,000 of accounts receivable. Credit sales for 2018 were $19, I 00,000. In its December 31, 2018, balance sheet, what amount should Farley report as allowance for uncollectible accounts? A) $711,000. B) $191,000. C) $73,000. D) $309,000.

C) $73,000. credit sales times percentage of sales uncollecible plus current balance in allowance account minus amount written off 19,100,000 X 0.01 = 191,000 + 520,000 = 711,000 - 638,000 = 73,000

2) Which of the following groups is not among financial intermediaries? A) Credit rating organizations. B) Mutual fund managers. C) CPAs. D) Financial analysts.

C) CPAs.

30) Under which of the following circumstances is it most appropriate to use the residual method to estimate stand-alone selling prices? A) The seller is unable to accurately estimate variable consideration associated with the contract. B) The seller provides the product bundled with other goods or services. C) The seller hasn't previously sold the product and hasn't determined a price for it. D) The seller does not have competitors from which to observe market prices of similar products.

C) The seller hasn't previously sold the product and hasn't determined a price for it.

24) Goods or services are capable of being distinct if: A) A buyer could use the good or service on its own. B) A buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere. C) The seller regularly sells the good or service separately, or the buyer could use the good or service on its own, or the buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere. D) The seller regularly sells the good or service separately.

C) The seller regularly sells the good or service separately, or the buyer could use the good or service on its own, or the buyer could use the good or service in combination with goods or services the buyer could obtain elsewhere.

69) On June 1, 2017, the Crocus Company began construction of a new manufacturing plant was completed on October 31, 2018. Expenditures on the project were as follows ($ in millions): July 1, 2017 54 October 1, 2017 22 February 1, 2018 30 April 1, 2018 21 September 1, 2018 20 October 1, 2018 6 On July 1, 2017, Crocus obtained a $70 million construction loan with a 6% interest rate. was outstanding through the end of October, 2018. The company's only other interest bearing debt was a long-term note for $100 million with an interest rate of 8%. This note was outstanding during all of 2017 and 2018. The company's fiscal year-end is December 31. In computing the capitalized interest for 2018, Crocus' average accumulated expenditures are: A) $122.30 million. C) $103.54 million. B) $46.30 million. D) $124.25 million.

D) $124.25 million.

31) Which of the following is not true? A) License fees are recognized as revenue at a point in time if the buyer expects that the seller's future activities will not affect the benefit the buyer derives from the intellectual property. B) Licensing fees are recognized as revenue over time whenever the seller expects its ongoing activities to affect the benefits that the buyer receives from intellectual property. C) License fees are recognized as revenue over time for any license that is viewed as providing a right of access. D) Licensing fees are recognized as revenue at the end of the license period, when the seller has completed its performance obligation to provide access to its intellectual property.

D) Licensing fees are recognized as revenue at the end of the license period, when the seller has completed its performance obligation to provide access to its intellectual property.