Question: On April 4, a $2,000 account receivable from J. P. Moore was determined to be uncollectible. Using the direct write-off method, the entry would include a _____.

Answer Options:

a. debit to Bad Debt Expense
b. debit to Accounts Receivable—J. P. Moore
c. credit to Cash
d. debit to Cash

Answer: A. debit to Bad Debt Expense 14

Question: Assume the J. P. Moore account previously written off is later collected. The journal entry to reinstate the receivable would include a _____.

Answer Options:

a. credit to Bad Debt Expense
b. debit to Bad Debt Expense
c. credit to Accounts Receivable—J. P. Moore
d. credit to Cash

Answer: C. credit to Accounts Receivable—J. P. Moore 15

Question: Under the allowance method, the journal entry to record the estimate of uncollectible accounts would include a credit to _____.

Answer Options:

a. Accounts Receivable
b. Bad Debt Expense
c. Allowance for Doubtful Accounts
d. None of these are correct

Answer: C. Allowance for Doubtful Accounts 16

Question: Under the allowance method, the journal entry to record the write-off of an account receivable would include a _____.

Answer Options:

a. credit to Bad Debt Expense
b. debit to Bad Debt Expense
c. credit to Cash
d. credit to Accounts Receivable

Answer: D. credit to Accounts Receivable 17

Question: The adjusting entry for accrued interest on a note receivable would include a _____.

Answer Options:

a. debit to Cash
b. debit to Interest Expense
c. credit to Interest Revenue
d. debit to Notes Receivable

Answer: C. credit to Interest Revenue 18

Question: The estimated value of an asset at the end of its useful life is called all of the following except _____.

Answer Options:

a. scrap value
b. salvage value
c. residual value
d. book value

Answer: D. book value 19

Question: A gain or loss on the exchange of similar assets will be recorded if the transaction has _____.

Answer Options:

a. boot
b. a trade-in allowance
c. commercial substance
d. a high value

Answer: C. commercial substance 20

Question: Which statement regarding depreciation is true?

Answer Options:

a. Depreciation measures a decline in the market value of a fixed asset
b. Depreciation provides cash to replace fixed assets
c. Functional depreciation factors include wear and tear or weather exposure
d. Depreciation allocates a fixed asset’s cost to expense over its useful life

Answer: D. Depreciation allocates a fixed asset’s cost to expense over its useful life 21

Question: The best definition of a copyright is _____.

Answer Options:

a. an asset created from favorable factors such as location and reputation
b. a name, term, or symbol used to identify a business or product
c. the exclusive right to publish and sell literary, artistic, or musical compositions
d. the exclusive right to produce and sell goods with unique features

Answer: C. the exclusive right to publish and sell literary, artistic, or musical compositions 22

Question: All of the following would be found in the Property, Plant, and Equipment section except _____.

Answer Options:

a. parking lot costs
b. a trademark
c. computer equipment
d. land improvements

Answer: B. a trademark 23

Question: Accumulated Depletion is reported on the _____ as a _____.

Answer Options:

a. balance sheet; deduction from the cost of the natural resource
b. balance sheet; addition to the cost of the natural resource
c. income statement; source of Other Revenue
d. None of these choices are correct

Answer: A. balance sheet; deduction from the cost of the natural resource 24

Question: The term “boot” refers to the _____.

Answer Options:

a. total cost of a new asset
b. cash paid or liability incurred when buying a new asset and trading in an old asset
c. down payment on an asset
d. gain or loss on an exchange of assets

Answer: B. cash paid or liability incurred when buying a new asset and trading in an old asset 25