ACC1002 Jan 2016 Mock Test 1
ACC1002 Jan 2016 Mock Test 1
ACC1002 Jan 2016 Mock Test 1
INSTRUCTIONS TO CANDIDATES
1. This test paper contains TWO sections and FOURTEEN printed pages.
Section A:
Answer all FIFTEEN multiple-choice questions (MCQ). For each question,
choose the best answer and circle only the letter (A, B, C, or D).
Section B: Answer BOTH questions by writing on the spaces provided after
each question.
2. This is a closed book test. You are not to bring in any materials other than your
student card, pens, pencils, erasers and University-approved calculators.
3. Write your name and student number in the box below and submit this question
paper with all pages intact at the end of the test.
Name:
Student Number:
Question 1 /8
Section B
Question 2 / 12
Total / 50
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SECTION A
Use 361 Degrees’ consolidated financial statements for financial year 2013 on next 3
pages to answer questions 1 to 4:
2. If 361 Degrees did NOT make the adjusting entry for “Property, plant and
equipment”, then
A. Convertible bonds.
B. Bank loans.
C. Finance costs.
D. Turnover.
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5. The seller of a piece of land originally asked for $2 million which it bought some
years ago at $1.5 million. Big Assets Company’s representative was a good
negotiator and bought the land from the seller at $1.8 million. The accounting
assumption or principle and the amount that Big Assets Company should comply
with and record the land are:
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10. Zion Company has assets of $600,000, liabilities of $250,000, and equity of
$350,000. It buys office equipment on credit for $75,000. What would be the
effects of this transaction on the accounting equation?
11. An overstatement of income would most likely result from which of the
following errors?
12. A method of estimating bad debts expense that involves a detailed examination of
outstanding accounts and their length of time past due is the:
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13. If the credit balance of the Allowance for Doubtful Accounts exceeds the amount
of an accounts receivable being written off, the entry to record the write-off
against the allowance account results in:
14. The general ledger controlling account for Accounts Receivable shows a debit
balance of $100,000. The Allowance for Doubtful Accounts has a credit
balance of $2,000 before adjusting for Bad Debts Expense for the year. Sales
for the year were $1,000,000. An aging of Accounts Receivable accounts
results in an estimate of $27,000 of Allowance for Doubtful Accounts.
Using aging of accounts receivable for estimation, Bad Debts Expense would be
debited for:
A. $27,000.
B. $29,000.
C. $25,000.
D. $20,000.
15. One might infer from a debit balance in Allowance for Doubtful Accounts that:
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SECTION B
SuperEXO
Unadjusted Trial Balance
December 31, 2013
Debits Credits
Cash $276,500
Accounts receivable 90,000
Office supplies 800
Prepaid rent 3,600
Prepaid insurance 1,500
Office equipment 72,000
Accumulated depreciation-office equipment $ 24,000
Accounts payable 4,000
Notes payable (due March 1, 2014) 60,000
Interest payable 600
Income taxes payable 9,000
Dividends payable 3,000
Unearned consulting fees 22,000
Share capital 200,000
Retained earnings 40,000
Dividends 3,000
Consulting fees earned 500,000
Rent expense 14,700
Insurance expense 2,200
Office supplies expense 4,500
Depreciation expense-office equipment 11,000
Salaries expense 330,000
Utilities expense 4,800
Interest expense 3,000
Income taxes expense 45,000
$862,600 $862,600
Other Data
1. Consulting services provided to clients but not recorded or collected total
$25,000 at December 31, 2013.
2. The company determined that $15,000 of previously unearned consulting fees
had been earned at December 31, 2013.
3. Office supplies on hand at December 31 total $300.
4. The company purchased all of its equipment when it first began business. At
that time, the estimated useful life of the equipment was six years (72 months).
5. The company prepaid its nine-month rent agreement on June 1, 2013.
6. The company prepaid its six-month insurance policy on December 1, 2013.
7. Salaries expense incurred but not recorded or paid totals $12,000 at December
31, 2013.
8. Interest expense owing on the note payable due March 1, 2014 is $200 for
December 2013.
9. The company's accounting firm estimates that income taxes expense for the
entire year is $50,000. The unpaid portion of this amount is due in early 2014.
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Question 1 (8 marks)
Prepare SuperEXO's income statement for the year ended December 31, 2013. Your
management instructed you to use the same account titles from the trial balance, as
well as to show income before taxes and income taxes expense before showing net
income.
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- End of Paper -
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