$2)$ Materiality refers to

a$.$ the tangible nature of an item.

b$.$ representational faithfulness.

c$.$ the decision$-$making relevance of a piece of information.

d$.$ None of these describe materiality.

$3)$ Fair value of an asset is

a$.$ an entry price.

b$.$ an entity$-$specific measure.

c$.$ an exit price.

d$.$ not used when following IFRS.

$4)$ Fiddler Company has a loan balance of $$853\mathrm{.}02$ and must make$2)$ Materiality refers to

a$.$ the tangible nature of an item.

b$.$ representational faithfulness.

c$.$ the decision$-$making relevance of a piece of information.

d$.$ None of these describe materiality.

$3)$ Fair value of an asset is

a$.$ an entry price.

b$.$ an entity$-$specific measure.

c$.$ an exit price.

d$.$ not used when following IFRS.

$4)$ Fiddler Company has a loan balance of $$853\mathrm{.}02$ and must make equal payments of $$100$ at the end of each of the next $10$ months. What is the monthly rate of interest that Fiddler Company is paying?

a$.2\%$

b$.2\mathrm{.}5\%$

c$.3\%$

d$.4\%$

$5)$ Helvetica Corporation is interested in leasing a piece of machinery that has a fair value of $$150,000.$ The market rate for financing is $8\%$ and Helvetica plans to lease the machinery for the next five years.

Calculate the quarterly lease payments.

a$)$ $$9,174$

b$)$ $$13,278$

c$)$ $$31,424$

d$)$ $$37,569$

$12.$ During the year, Popsicle Inc., which uses the allowance method, made an entry to write off a $$4,000$ uncollectible account. Before this entry was posted, the balance in accounts receivable was $$80,000$ and the balance in the allowance account was $$7,000.$ The net realizable value of accounts receivable after the write$-$off entry was

a$)$ $$80,000$

b$)$ $$77,000$

c$)$ $$76,000$

d$)$ $$73,000$

$13.$ The following information is available for Pirate Company:

$-$ Allowance for Expected Credit Losses at December $31,2023....................$ $$7,000$

$-$ Credit Sales during $2024............................................................................270,000$

$-$ Accounts Receivable deemed worthless and written off during $2024.........2,800$

As a result of a review and aging of Accounts Receivable in early January $2025,$ it was determined that an Allowance for Expected Credit Losses balance of $$7,500$ is required at December $31,2024.$ What amount should Pirate record as loss on impairment for calendar $2024?$

a$)$ $$4,200$

b$)$ $$3,300$

c$)$ $$7,500$

d$)$ $$74,000$

$14.$ The following accounts were included on Mali Co$.$s unadjusted trial balance at December $31,2023$:

$-$ Accounts Receivable $|$ $$850,000|($Debit$)$

$-$ Allowance for Expected Credit Losses $|$ $$11,000|($Debit$)$

$-$ Net Credit Sales $|$ $$2,950,000|($Credit$)$

Mali estimates that $1\mathrm{.}5\%$ of the gross accounts receivable will become uncollectible. After the proper adjustment at December $31,2023,$ the allowance for expected credit losses should have a credit balance of

a$)$ $$23,750$

b$)$ $$12,750$

c$)$ $$11,000$

d$)$ $$1,750$

$15.$ If receivables are used as collateral in borrowing transactions,

a$)$ the receivables generally come under the control of the lender.

b$)$ a liability is reported on the borrower$$s statement of financial position.

c$)$ the receivables will be reported as a liability.

d$)$ the transaction would be reported as a sale.

Braun Company factors $$300,000$ of accounts receivable with Schick Factors Inc. on a without recourse basis. The receivables are transferred to Schick Factors, which takes over full responsibility for collections. Schick assesses a finance charge of $4\%$ and withholds an initial amount equal to $7\%$ of the accounts receivable for returns and allowances.

$16.$ The loss on disposal of receivables recorded by Braun is

a$)$ $$12,000$

b$)$ $$21,000$

c$)$ $$33,000$

d$)$ $$0$

Use the following information for questions $17$ and $18.$

Shanti Inc., a calendar$-$year corporation, its financial statements for the years $2023$ and $2022$ contained errors as follows:

$2023$

$-$ Ending Inventory: $$6,000$ overstated

$-$ Depreciation Expense: $$4,000$ understated

$2022$

$-$ Ending Inventory: $$16,000$ overstated

$-$ Depreciation Expense: $$12,000$ overstated

$17.$ Assume that the proper correcting entries were made at December $31,2022.$ By how much will $2023$ income before taxes be overstated or understated?

a$)$ $$2,000$ understated

b$)$ $$2,000$ overstated

c$)$ $$4,000$ understated

d$)$ $$10,000$ overstated

$18.$ Assume that no correcting entries were made at December $31,2022.$ Ignoring income taxes, by how much will retained earnings at December $31,2023$ be overstated or understated?

a$)$ $$2,000$ understated

b$)$ $$18,000$ understated

c$)$ $$10,000$ overstated

d$)$ $$18,000$ overstated

$19.$ The lower of cost and NRV principle specifies that the comparison is usually applied on

a$)$ total inventory.

b$)$ individual categories of inventory.

c$)$ an item$-$by$-$item basis.

d$)$ major categories of inventory.

$20.$ Uganda Corporation uses the fair value model of accounting for its investment property. The fair values of its property were: December $31,2020,$ $$225,000,$ $$225,000$ and December $31,2021,$ $$233,000.$ At December $31,2021$ Uganda should

a$)$ recognize a gain of $$8,000$ in income.

b$)$ report a gain of $$8,000$ in other comprehensive income.

c$)$ defer the gain until the property is sold.

d$)$ do nothing $($ignore it$).$