Question

Multiple choice
1- ATM accepts a credit card payment for $4,000 for service rendered. The credit card company changes a 5% fee for handling the transaction. Based on this information , which of the following is false

a) Accounts Receivable - Credit card company will be debited for $3,800
b) Crdit Card Fee Expense will be debited for $200
c) Cash will be debited for $3,800
d) Service Revenue will be credited for $4,000.

2- An accounting practice that recognizes an estimated accout, rather than actual amount, of uncollectible accounts expense in the period when the sales are recoreded isthe :

a) Direct write-off method.
b) Dynamic method
c) Allwance Metod
d) Collateral method

3- Ross Company spent $500 repairing a long-term asset which kept it in notmal working order. How should the $500 cost be trasted on the financial statements?

a) Record as maintanance expense.
b) Record as an increase in the asst account.
c) Record an an icrease in accumlated depreciation
d) All above

4- Standford loaned $25000 to Harverd on NOvember 1, 2017 for one year at 6% interst. On December 31, 2017. Stanford records an interst receivable of:

a) $125.
b) $250
c) $ 1,250.
d) $ 1,500

5- The current retio measures a firm's

a) Profitability
b) Ability to pay long--term liability
c) Ability to pay shot-trem liability
d) a,b and c

6- Which of the follwoing woulf NOT be classified as long-term asset?

a) Equipment
b) Accounts Payable
c) Automobiles
d) Building

7- What is the going concern assumption?

a) Assumes that a company will go thae distance for their customers.
b) Assumes company will go out of business for ten years
c) Assumes that a company will follow proper accounting rules
d) Assumes that the compeny will continue to operate indefinitely

8- A clssifed balance sheet

a) Does not balance
b) Shows depits and Credits
c) Arranges assets and liabilities by liquidity
d) Lists all revenues and expenses.

Answer 1

1.

ATM accepts a credit card payment for $4,000 for service rendered. The credit card company charges a 5% fee for handling the transaction. Based on this information ,following is false

a) Accounts Receivable - Credit card company will be debited for $3,800

2.

An accounting practice that recognizes an estimated accout, rather than actual amount, of uncollectible accounts expense in the period when the sales are recoreded is the allowance method.

Hence, correct option is c) Allwance Method

3.

Ross Company spent $500 repairing a long-term asset which kept it in notmal working order. It will be recorded as maintanance expense. Correct option is (a)

4.

Standford loaned $25000 to Harverd on November 1, 2017 for one year at 6% interest. On December 31, 2017. Stanford records an interest receivable of $250, calculated as under:

Interest receivable on December 31, 2017 = 25,000 x 6% x 2/12

= $250

Correct option is (b)