NATIONAL UNIVERSITY OF SINGAPORE

NUS BUSINESS SCHOOL

DEPARTMENT OF ACCOUNTING

ACC1002 FINANCIAL ACCOUNTING

MOCK MID-TERM TEST

Thursday, 10 March 2011

Time Allowed: 1 hour 15 minutes
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INSTRUCTIONS TO CANDIDATES

1. This test paper consists of TEN (10) multiple-choice questions and ONE question
requiring written answers.

2. For the multiple-choice questions, answer ALL questions by shading the letter
representing the best answer on the computer scoring sheet using pencils. If you just
mark on this question paper, your answers will not be marked.

3. For the question requiring written answers, please write in the spaces provided.

4. This is a closed-book test. You are not allowed to bring in any materials other than
pen, pencils, erasers and calculators.

5. Make sure you write your name and your matriculation number on both this question
paper and the computer scoring sheet which must be submitted at the end of the test.
If you provide us with a wrong matriculation number, you will receive zero for
this test.

Name:

Matriculation Number:

For Examiners’ Use Only:

Marks
Q1
/ 20
MCQ
Q2 / 40
Total / 60
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QUESTION 1: 10 MCQ (2 marks per question, total 20 marks)

1. The seller of a piece of land originally asked for $2 million. The company
representative was a good negotiator and bought the land for the company at $1.8 million.
Which general accounting principle requires the land be recorded at $1.8 million in the
accounting records of the company?
A. Matching
B. Going-concern C
C. Cost
D. Time period

2. HDisk Inc. received an order for a disk drive on 1 May. The company finished
manufacturing the drive on 8 May and delivered it to the customer on 10 May, along
with a bill. Under HDisk's credit terms, the customer is required to pay by 10 June.
HDisk received payment from the customer on 5 June. If HDisk uses the accrual
basis of accounting, when will the revenue be recognized?

A. 1 May
B. 10 May
C. 5 June
B
D. 10 June

3. The idea of double-entry governs financial accounting. A company acquires an asset.

Which of the following could NOT possibly be the other half of the entry?
A. decrease in another asset
B. increase in a liability
C. increase in an expense B
D. increase in equity account

4. Which of the following would NOT be classified as a current asset?

A. Prepaid insurance
B. Building
C. Marketable securities or short-term investments
D. Trade receivables B

5. If the debit amount of a journal entry to record the purchase of supplies (current
asset) on account was NOT posted:
A. liabilities would be understated
B. liabilities would be overstated D
C. assets would be overstated
D. assets would be understated

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6. An adjusting journal entry CAN include a debit to

A. cash and a credit to a liability
B. an asset and a credit to a revenue B
C. an asset and a credit to another asset
D. an asset and a credit to a liability

7. Mitchell & Frank Incorporated uses the percentage-of-sales method to estimate

uncollectibles. Net credit sales for the current year amount to $1,000,000 and management
estimates 3% will be uncollectible. Allowance for Doubtful Accounts prior to adjustment has
a debit balance of $1,900. The amount of expense reported on the income statement will be:
A. $31,900
B. $30,000
C. $28,100 B
D. $1,900

8. The general ledger controlling account for Accounts Receivable shows a debit balance of
$100,000. The Allowance for Uncollectible Accounts has a credit balance of $2,000. Sales
for the year were $1,000,000. In the past, 2% of sales has proven uncollectible, and an aging
of Accounts Receivable accounts results in an estimate of $27,000 of uncollectible accounts
receivable.
Using aging of accounts receivable for estimation, Uncollectible Accounts Expense would
be debited for
A. $27,000
B. $29,000 D
C. $20,000
D. $25,000

9. One might infer from a debit balance in Allowance for Uncollectible Accounts that:

A. a posting error has been made

B. Uncollectible expense has been overestimated
C. more has been written off than estimated
C
D. aging of accounts receivable is being used

10. Under the allowance method, the entry to write off a $1,425 uncollectible account
includes:
A. a debit to Accounts Receivable for $1,425
B. a credit to Uncollectible-Account Expense for $1,425
C. a credit to Allowance for Uncollectible Accounts for $1,425 D
D. a debit to Allowance for Uncollectible Accounts for $1,425

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QUESTION 2 (40 marks)

Will be similar to problems 3-2A and 3-2B in textbook.

- END OF PAPER -

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