Multiple choice

1. A note receivable is a negotiable instrument which 

can only be collected by a bank. 

eliminates the need for a bad debts allowance. 

takes the place of checks in a business firm. 

can be transferred to another party by endorsement.

2. Depreciable cost is the 

cost of an asset less its salvage value. 

cost of an asset less accumulated depreciation. 

book value of an asset. 

book value of an asset less its salvage value.

3. Mather Company purchased equipment on January 1, 2010 at a total invoice cost of $224,000; 

additional costs of $4,000 for freight and $20,000 for installation were incurred.

 The equipment has an estimated salvage value of $8,000 and an estimated useful life of five years. 

The amount of accumulated depreciation at December 31, 2011 if the straight-line method of depreciation is used is: 

$96,000. 

$86,400. 

$99,200. 

$88,000.

4. Hull Company acquires land for $86,000 cash. Additional costs are as follows:

Removal of shed$300

Filling and grading1,500

Salvage value of lumber of shed120

Broker commission1,130

Paving of parking lot10,000

Closing costs560

Hull will record the acquisition cost of the land as

 $89,370. 

$87,690. 

$89,610. 

$86,000.