Question 1 1 Points

Question 1 1 points When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are greater than the book value of the asset.

Question 1 answers True False

Question 2 1 points A company sold a delivery truck for $18,000 cash. The truck cost $47,500 and had accumulated depreciation of $36,000 as of the date of sale. The entry to record the sale would include

Question 2 answers an increase in accumulated depreciation for $36,000. a decrease in delivery truck for $11,500. a loss for $6,500. a gain for $6,500.

Question 3 1 points If a company sells a fixed asset where the book value is less than the cash received, a gain must be recognized.

Question 4 1 points Residual value is ignored under double-declining-balance depreciation except for the final year.

Question 5 1 points Which of the following should be included in the acquisition cost of a piece of equipment?

Question 5 answers Transportation costs Installation costs Testing costs prior to placing the equipment into production All of these

Question 6 1 points Intangible assets are used in operations but Question 6 answers cannot be specifically identified. cannot be sold. lack physical substance. cannot be long-lived.

Question 7 1 points Recording depreciation

Question 7 answers decreases net income and cash flows. decreases net income and has no effect on cash flows. decreases net income, assets, and cash flows. decreases net income and has no effect on assets and cash flows.

Question 8 1 points To measure depreciation, all of the following must be known EXCEPT

Question 8 answers market value. residual value. historical cost. estimated life.

Question 9 1 points Which of the following is NOT characteristic of the accumulated depreciation account?

Question 9 answers Accumulated depreciation represents cash reserved for asset replacement. Accumulated depreciation is a contra-asset account. Accumulated depreciation may be disclosed in the notes to the financial statements. All of these are characteristic of the accumulated depreciation account.

Question 10 1 points Equipment was purchased for $30,000. It has a useful life of 5 years and a residual value of $4,000. What is depreciation expense for year two under the double-declining-balance method?

Question 10 answers $5,200 $6,000 $6,240 $7,200

Question 11 1 points Expenditures for research and development are generally recorded as

Question 11 answers current operating expenses. assets and amortized over their estimated useful life. assets and amortized over 40 years. current assets.

Question 12 1 points On September 1, a machine with a useful life of 8 years and a residual value of $3,000 was purchased for $47,000. What is depreciation expense in the year of purchase under straight-line depreciation assuming a December 31 year-end?

Question 13 1 points If a fixed asset with an original cost of $18,000 and accumulated depreciation of $2,000 is sold for $15,000, the company must

Question 13 answers recognize a loss on the income statement under other expenses. recognize a loss on the income statement under operating expenses. recognize a gain on the income statement under other revenues. Gains and losses are not to be recognized upon the sell of fixed assets.

Question 14 1 points What type of depreciation occurs when an asset can no longer provide services at the level originally intended?

Question 14 answers Physical depreciation Market depreciation Cost depreciation Functional depreciation

Question 15 1 points A current asset account must be increased for revenue expenditures since they only benefit the current period.

Question 16 1 points Expenditures made to extend an asset’s life are deemed revenue expenditures.

Question 16 answers True False Question 17 1 points Other descriptive titles for fixed assets would include

Question 17 answers plant assets. property, plant, and equipment. other long-term assets both plant assets and property, plant, and equipment.

Question 18 1 points Goodwill is

Question 18 answers amortized similar to other intangibles. only written down if an impairment in value occurs. charged to expense immediately. amortized over 40 years or its economic life, whichever is shorter.

Question 19 1 points An intangible asset is one that has a physical existence.

Question 20 1 points Amortization refers to the systematic transfer of fixed assets to expense accounts.

Question 21 1 points The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

Question 21 answers depletion. deferral. amortization. depreciation.

Question 22 1 points Which of the following is an example of a capital expenditure?

Question 22 answers Cleaning the carpet in the front room Tune-up for a company truck Replacing an engine in a company car Replacing all burned-out light bulbs in the factory Question 23 1 points A fixed asset with a cost of $30,000 and accumulated depreciation of $25,000 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?

Question 23 answers $2,500 loss $1,500 loss $2,500 gain $1,500 gain

Question 24 1 points A gain is recorded on the sale of fixed assets when

Question 24 answers the asset is sold for a price less than its book value. the asset’s book value is less than the cash received. accumulated depreciation is less than the cash received. None of the above.

Question 25 1 points A fully depreciated asset must be

Question 25 answers removed from the books. kept on the books until sold or discarded. disclosed only in the notes to the financial statements. recognized on the income statement as a loss.

Question 26 1 points Gross earnings for a payroll period less payroll deductions are referred to as

Question 26 answers overtime pay. bonus pay. gross pay. net pay.

Question 27 1 points Most employers are required to withhold a portion of the earnings of each employee for FICA tax.

Question 28 1 points An employee receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $300; cumulative earnings for year prior to current week, $90,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the net pay for the employee?

Question 28 answers $1,147.95 $1,059.75 $1,470.00 $1,359.75

Question 29 1 points The total earnings of an employee for a payroll period is referred to as the net pay.

Question 30 1 points If 50,000 shares are authorized, 35,000 shares are issued, and 2,000 shares are reac- quired, the number of outstanding shares is 33,000.

Question 31 1 points FICA tax is a payroll tax that is paid by both the employee and the employer.

Question 32 1 points Before a stock dividend can be declared or paid, there must be sufficient cash.

Question 32 answers True False Question 33 1 points Liabilities that are due and payable beyond one year or paid out of noncurrent assets are termed long-term liabilities.

Question 34 1 points A company sold 200 shares of common stock with a par value of $5 at a price of $13 per share. What is the effect on the accounts of this transaction?

Question 34 answers Increase cash $2,600; increase retained earnings $2,600 Increase cash $1,000; increase common stock $1,000 Increase cash $2,600; increase common stock $1,000 and increase paid-in capital $1,600 Increase cash $2,600; increase common stock $1,600 and increase paid-in capital $1,000

Question 35 1 points For the year that just ended, a company reports net income of $1,500,000. There are 500,000 shares authorized, 300,000 shares issued, and 250,000 shares of common stock outstanding. What is the earnings per share?

Question 35 answers $5.00 $2.50 $6.00 $3.00

Question 36 1 points If $4,000,000 of 12% bonds are issued at 103 1/4, the amount of cash received from the sale is

Question 36 answers $4,040,000. $4,000,000. $4,130,000. $3,520,000. Question 37 1 points The par value per share of common stock represents Question 37 answers the minimum selling price of the stock established by the articles of incorporation. the minimum amount the stockholder will receive when the corporation is liquidat- ed. the monetary amount assigned to each share of stock in the articles of incorporation. the amount of dividends per share to be received each year. Question 38 1 points In which section of the balance sheet would treasury stock be reported?

Question 38 answers Fixed assets Long-term liabilities Stockholders' equity Intangible assets

Question 39 1 points A corporation has 10,000 shares of $25 par value stock outstanding that has a current market value of $100. If the corporation issues a 5-for-1 stock split, the market value of the stock will fall to approximately $20.

Question 40 1 points In order to record a contingent liability, the liability must be probable and reasonably estimated.

Question 41 1 points The total earnings of an employee for a payroll period are referred to as

Question 41 answers take-home pay. pay net of taxes. net pay. gross pay.

Question 42 1 points Payroll taxes levied against employees become liabilities

Question 42 answers the first of the following month. at the time the liability for the employee's wages is paid. when earned by the employee. at the end of an accounting period. Question 43 1 points If 50,000 shares are authorized, 37,000 shares are issued, and 2,000 shares are reac- quired, the number of outstanding shares is 35,000. Question 43 answers True False Question 44 1 points FICA tax becomes a liability to the federal government at the time the employees are paid.

Question 45 1 points Obligations that depend on future events and are based on past transactions are contingent liabilities.

Question 46 1 points If the market rate of interest is 8% and a corporation's bonds bear interest at 7%, the bonds will sell at a premium.

Question 47 1 points Cash dividends are not paid on shares of treasury stock.

Question 48 1 points

A 10% stock dividend will increase the number of shares outstanding and the book value per share.

Question 49 1 points The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Question 50 1 points When a corporation issues bonds, it executes a contract with the bondholders known as a bond debenture.

Question 51 1 points Under the direct write-off method, an attempt is made to match Bad Debt Expense to sales revenues in the same accounting period.

Question 52 1 points When the estimate based on analysis of receivables is used, income is reduced when a specific receivable is written off. Question 52 answers True False

Question 53 1 points The inventory method that considers the inventory to be composed of the units of merchandise acquired earliest is called

Question 53 answers first-in, first-out. retail method. average cost. last-in, first-out.

Question 54 1 points During inflationary periods, the use of the FIFO method of costing inventory will yield an inventory amount for the balance sheet approximating the current replacement cost.

Question 55 1 points After the accounts are adjusted and closed at the end of the fiscal year, Accounts Re- ceivable has a balance of $500,000 and Allowance for Doubtful Accounts has a balance of $25,000. What is the net realizable value of the accounts receivable?

Question 56 1 points "Market," as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner.

Question 57 1 points Under which method of inventory cost flows is the cost flow assumed to be in the reverse order in which the expenditures were made?

Question 57 answers Average cost Last-in, first-out First-in, first-out Last-in, last-out

Question 58 1 points The inventory data for an item for November are:

Nov. 1 Inventory 25 units at $20 10 Purchased 30 units at $21 30 Purchased 10 units at $22 Sold 35 units

Using the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30?

Question 58 answers $640 $605 $623 $660

Question 59 1 points A 90-day, 10% note for $10,000 dated April 1 is received from a customer on account. The face value of the note is

Question 59 answers $10,000. $11,000. $1,000. $9,000.

Question 60 1 points Allowance for Doubtful Accounts has an unadjusted balance of $400 at the end of the year, and uncollectible accounts expense is estimated at 1% of net sales. If net sales are $300,000, the amount of the adjustment to record the provision for doubtful accounts is

Question 60 answers $400. $3,400. $3,000. $2,600.

Question 61 1 points A 60-day, 12% note for $15,000 dated May 1 is received from a customer on account. The maturity value of the note is

Question 61 answers $15,300. $15,000. $14,700. $16,800. Question 62 1 points Cost is a method of inventory valuation.

Question 62 answers True False Question 63 1 points Allowance for Doubtful Accounts has an unadjusted balance of $1,100 at the end of the year, and an analysis of customers' accounts indicates doubtful accounts of $12,900. Which of the following records the proper provision for doubtful accounts? Question 63 answers Increase Uncollectible Accounts Expense, $14,000; increase Allowance for Doubtful Accounts, $14,000 Decrease Allowance for Doubtful Accounts, $14,000; decrease Uncollectible Ac- counts Expense, $14,000 Decrease Allowance for Doubtful Accounts, $11,800; decrease Uncollectible Ac- counts Expense, $11,800 Increase Uncollectible Accounts Expense, $11,800; increase Allowance for Doubtful Accounts, $11,800 Question 64 1 points The due date on a 90-day note dated June 10 is September 8.

Question 65 1 points When companies sell their receivables to other companies, the transaction is called fac- toring.

Question 66 1 points The due date of a 60-day note dated July 10 is September 9.

Question 67 1 points If the cost of an item of inventory is $60 and the current replacement cost is $65, the amount included in inventory according to the lower of cost or market is

Question 67 answers $5. $60. $65. $125.

Question 68 1 points The two most widely used methods for determining the cost of inventory are

Question 68 answers FIFO and LIFO. FIFO and average cost. LIFO and average cost. gross profit and average cost.

Question 69 1 points The FIFO method of costing inventory is based on the assumption that costs should be charged against revenues in the reverse order in which they were incurred.

Question 70 1 points Use the following data to calculate the cost of ending inventory using the LIFO method. September 1 Beginning Inventory 15 units @ $20 September 10 Purchases 20 units @ $25 September 20 Purchases 25 units @ $28 September 30 Ending Inventory 30 units

Question 70 answers $825 $750 $675 $600

Question 71 1 points The due date of a 90-day note dated July 5 is

Question 71 answers September 30. October 2. October 3. October 1.

Question 72 1 points The amount of the promissory note plus the interest earned on the due date is called the Question 72 answers realizable value. maturity value. face value. net realizable value.

Question 73 1 points Of the three widely used inventory costing methods (FIFO, LIFO, and average), the FIFO method of costing inventory is based on the assumption that costs are charged against revenues in the order in which they were incurred.

Question 74 1 points In valuing damaged merchandise for inventory purposes, net realizable value is the estimated selling price less any direct cost of disposition.

Question 75 1 points A written promise to pay a sum of money on demand or at a definite time is called a(n)

Question 75 answers default. deferral. accrual. promissory note.

Question 76 1 points When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Question 76 answers Risk assessment Proofs and security measures Monitoring Separating responsibilities for related operations

Question 77 1 points In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per depositor’s records.

Question 77 answers True False Question 78 1 points In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.

Question 79 1 points Which of the following is NOT defined as cash? Question 79 answers Commercial paper Checks Money orders Coins Question 80 1 points Internal control does NOT consist of policies and procedures that Question 80 answers guarantee the company will not go bankrupt. ensure that laws and regulations are being followed. protect assets from misuse. ensure that business information is accurate. Question 81 1 points Internal control is enhanced by combining the control of a transaction with the record- keeping function.

Question 82 1 points Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would require an adjusting entry including a

Question 82 answers debit to Accounts Receivable. debit to Cash. debit to Accounts Payable. credit to Accouts Payable.

Question 83 1 points Separating the custody of assets from accounting for assets is a part of which element of internal control?

Question 83 answers Information and communication Monitoring The control environment Control procedures

Question 84 1 points In preparing a bank reconciliation, the amount indicated by a credit memorandum for a note receivable collected by the bank is added to the balance per depositor’s records.

Question 85 1 points Bank customers are considered owners of the bank so the bank shows their accounts as an asset on the bank's records.

Question 85 answers True False Question 86 1 points Money market accounts, commercial paper, and U.S. Treasury Bills are examples of cash equivalents. Question 86 answers True False Question 87 1 points An element of internal control is

Question 87 answers generally accepted accounting principles. control procedures. concepts. principles.

Question 88 1 points A debit memorandum from the bank indicates that the bank has deducted an amount from the depositor's account.

Question 89 1 points Requiring employees to take annual vacations is part of which element of internal control?

Question 89 answers The control environment Risk assessment Control procedures Monitoring

Question 90 1 points Which of the following would be added to the balance per books on a bank reconciliation?

Question 90 answers Service charges Outstanding checks Deposits in transit Notes collected by the bank

Question 91 1 points Employing internal auditors is part of which element of internal control? Question 91 answers Monitoring Control procedures Risk assessment The control environment

Question 92 1 points Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer. What adjustment is required in the depositor's accounts?

Question 92 answers Increase Notes Receivable; decrease Cash Increase Cash; increase Miscellaneous Income Increase Cash; decrease Notes Receivable Increase Accounts Receivable; decrease Cash

Question 93 1 points A credit memorandum received with a bank statement means the bank account has been increased.

Question 94 1 points Depositing all cash, checks, etc. in a bank and paying with checks is an internal control proce- dure over cash.

Question 95 1 points A minimum cash balance maintained in a bank account is called a line of credit.

Question 95 answers True False Question 96 1 points Information and communication are essential elements of an organization's internal control.

Question 97 1 points A check for $456 was erroneously charged by the bank as $654. In order for the bank reconciliation to balance, you must deduct $198 from the bank statement balance.

Question 98 1 points When the petty cash fund is replenished, the petty cash account is adjusted for the total of all expenditures made since the fund was last replenished.

Question 99 1 points A credit memorandum from the bank

Question 99 answers decreases a bank customer's account. is used to show a bank service charge. shows that a company has deposited a customer's NSF check. shows the bank has collected a note receivable for the customer.

Question 100 1 points Risks can be analyzed to

Question 100 answers assess their likelihood of occurring. assess their overall significance. determine actions that will minimize them. do all of these.