Accounting Concepts and Measurement Assessment

Question 1

True or False. An accumulated depreciation account is considered an account with a natural credit balance, meaning the account increases with debits and
decreases with credits.

Answer 1

False

Question 2

Suzie agrees to pay Ricky the $8,000 in 2 months, at 15% interest. Which of the following is the most accurate way Ricky and Suzie should record this event on each of their balance sheets?

-Ricky will record the balance as a Notes Receivable and Suzie will list the $8,000 as a Notes Payable.

-Ricky will record $9,200 as a Notes Receivable, Suzie will record $9,200 as a Notes Payable.

-Ricky will add $8,000 as a Notes Payable and Suzie will add $8,000 as a Notes Receivable.

-Ricky will add $9,200 as a Cash deposit, and Suzie will record $9,200 as a Notes Payable.

Answer 2

Ricky will record the balance as a Notes Receivable and Suzie will list the $8,000 as a Notes Payable.

Question 3

Suzie has agreed to pay Ricky back the outstanding balance of $8,000 over the course of 2 months at 15% interest, and have both signed the promissory note. How would Ricky account this?

Answer 3

Because Ricky is converting the outstanding balance to a note, he would first create an entry debiting his notes receivable $8,000 and credit his accounts receivable $8,000.

Question 4

Which Promissory Note component would be entered in section [ 3 ] of the statement below?

I, [1], agree to pay [2] the following amount of [3] with interest at [4], by [5].

Answer 4

Principal Value

Question 5

Which Promissory Note component would be entered in section [ 1 ] of the statement below?

I, [1], agree to pay [2] the following amount of [3] with interest at [4], by [5].

Answer 5

Maker

Question 6

Which Promissory Note component would be entered in section [ 5 ] of the statement below?

I, [1], agree to pay [2] the following amount of [3] with interest at [4], by [5].

Answer 6

Time frame

Question 7

Katie runs an ice cream shop called “Cream and Cone,” and has made her mark by selling flavored sugar cones to enhance her customers’ enjoyment of all the unique flavors of ice cream. She notices that her Maple-Bacon sugar cone is a hot item, especially when paired with a scoop of Bourbon-Butter Pecan. She has decided to trademark this signature cone and use it as her brand’s star item. She’s calling it her ‘Maple-Bacon Bourbon Blast’. Her new trademark is considered what kind of asset?

Answer 7

Intangible

Question 8

Roger owns a food delivery service that uses couriers on electric skateboards to deliver locally in the business district. His skateboards which are valued at $2,700 are considered which of the following?

Answer 8

long-term asset

Question 9

What’s the asset equation?

Answer 9

Total Assets = Total Liabilities + Total Equity

Question 10

True or False. A prepaid expense such as prepaid rent or insurance is initially classified as a liability.

Answer 10

False

Question 11

A copyright is an example of what type of asset?

Answer 11

Intangible

Question 12

Two Things bookeepers can do if they dont know how to book something?

Answer 12

They ask a fellow bookkeeper or accountant

They ask the business owner for more clarification.

Question 13

True or False. The Direct Write-Off Method adheres to the matching principle because it lets businesses write off debt that is believed to be uncollectible.

Answer 13

False

Question 14

When a customer purchases something by cash or check, before it’s deposited into the bank, which account should it be entered into?

Answer 14

Undeposited Funds

Question 15

If a customer or vendor buys something on credit, but hasn’t made a payment in over 30 days, which receivable account should be used?

Answer 15

“Aging” Receivable