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(ACCT102)Quiz1-2006solution.pdf
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2006 Summer ACCT 102 L1 Quiz 1

NAME: STUDENT ID: Mark:
Multiple Choice Questions (20 marks):

1.Accounting is an information and measurement system that: ( E )

A) Identifies business activities.
B) Records business activities.
C) Communicates business activities.
D) Helps people make better decisions.
E) All of the above.



2.FastForward has beginning equity of $257,000, net income of $51,000, withdrawals of $40,000 and investments by owners of $6,000. Its ending equity is:

A) $223,000.
B) $240,000.
C) $268,000.
D) $274,000.
E) $208,000.

Answer: D
Calculation: $257,000 + $51,000 - $40,000 + $6,000 = $274,000


3. While in the process of posting from the journal to the ledger a company failed to post a $50 debit to the Office Supplies account. The effect of this error will be that: ( B )

A) The Office Supplies account balance will be overstated.
B) The trial balance will not balance.
C) The error will overstate the debits listed in the journal.
D) The total debits in the trial balance will be larger than the total credits.
E) All of the above effects will be caused by the error.

4. Intangible assets are usually amortized using: ( A )
(A) The straight-line method
(B) The unit-of-production method
(C) The double-declining-balance method
(D) The sum-of-the-years digits method
(E) All of the above

5. If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is: ( C )

A) Debit Cash and credit Legal Fees Earned.
B) Debit Cash and credit Unearned Legal Fees.
C) Debit Unearned Legal Fees and credit Legal Fees Earned.
D) Debit Legal Fees Earned and credit Unearned Legal Fees.
E) Debit Unearned Legal Fees and credit Accounts Receivable.


6.Costs included in the Merchandise Inventory account can include: ( E )

A) Invoice price minus any discount.
B) Freight-in.
C) Storage.
D) Insurance.
E)
All of the above.




7. The straight-line depreciation method and the double-declining-balance depreciation method: ( A )
A) Produce the same total depreciation over an asset's useful life.
B) Produce the same depreciation expense each year.
C) Produce the same book value each year.
D) Are acceptable for tax purposes only.
E) Are the only acceptable methods of depreciation for financial reporting.

8.The asset section of a classified balance sheet usually includes: ( A )

A) Current assets, investments, plant assets, and intangible assets.
B) Curre