Accoutning

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  Question 1

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

  Question 2

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The accounting term depreciation measures

  Question 3

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Depreciation on a yearly basis differs between the double-declining-balance method and the straight-line method. However, total depreciation across the years of an asset’s life is the same under the double-declining-balance method or the straight-line method.

  Question 4

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Accelerated depreciation is primarily used for

  Question 5

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Book value is defined as

  Question 6

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A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400, and $5,850 was paid to remove an old building from which salvaged materials sold for $1,950. What is the cost basis for the land?

  Question 7

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NBC Company purchased a patent from ABC for $144,000. At the time of purchase the patent had been in existence for 10 years. What is the first year's amortization?

  Question 8

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Salvage value has a similar meaning as

  Question 9

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Goodwill equals the purchase price of a company over the fair market value of its net assets.

  Question 10

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The straight-line method is appropriate if usage of the asset varies considerably from year to year.

  Question 11

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

  Question 12

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Amortization refers to the systematic transfer of fixed assets to expense accounts.

  Question 13

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A gain is recorded on the sale of fixed assets when

  Question 14

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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 15

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Physical depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

  Question 16

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Which of the following should be included in the acquisition cost of a piece of equipment?

  Question 17

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Depletion is the process of transferring the cost of intangible assets to an expense account.

  Question 18

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Goodwill is

  Question 19

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Expenditures made to extend an asset’s life are deemed revenue expenditures.

  Question 20

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If a capital expenditure is treated as a revenue expenditure, then

  Question 21

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A capital expenditure would appear on the

  Question 22

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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 23

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Expenditures for research and development are generally recorded as

  Question 24

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Intangible assets are used in operations but

  Question 25

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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 26

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If the market rate of interest is 6% and a corporation's bonds bear interest at 7%, the bonds will sell at a discount.

  Question 27

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A bond indenture is

  Question 28

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The declaration and issuance of a stock dividend does NOT affect the total amount of a corporation's assets, liabilities, or stockholders' equity.

  Question 29

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

  Question 30

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Stockholders' equity

  Question 31

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Which of the following is characteristic of deferred income tax payable?

  Question 32

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The major subdivisions of the Stockholders' Equity section of the balance sheet are

  Question 33

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An employee receives an hourly rate of $27, 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, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the gross pay for the employee?

  Question 34

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When a corporation issues bonds, it executes a contract with the bondholders known as a bond indenture.

  Question 35

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Bonds are sold at face value when the contract rate is equal to the market rate of interest.

  Question 36

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A current liability is a debt that can reasonably be expected to be paid

  Question 37

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When the contract rate of interest on bonds is less than the market rate of interest, the bonds sell at

  Question 38

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What is the effect of a stock dividend on the balance sheet?

  Question 39

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The cost of a product warranty should be included as an expense in the

  Question 40

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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 41

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Prior to the last weekly payroll period of the calendar year, the cumulative earnings of employees A and B are $106,150 and $91,000, respectively. Their earnings for the last completed payroll period of the year are $850 each. The amount of earnings subject to social security tax at 6% is $106,800. All earnings are subject to Medicare tax of 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax for this payroll period on the two salary amounts of $850 each?

  Question 42

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Gross earnings for a payroll period less payroll deductions are referred to as

  Question 43

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Where is interest expense listed on the income statement?

  Question 44

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Federal unemployment compensation tax is a tax that is paid only by employers.

  Question 45

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Earnings per common share is one factor that influences the decision to use debt financing or equity financing.

  Question 46

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FICA tax is a payroll tax that is paid by both the employee and the employer.

  Question 47

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The total earnings of an employee for a payroll period are referred to as

  Question 48

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Medicare taxes are withheld from an employee's pay only until the employee has earned a specific amount each year.

  Question 49

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What options does a business have when financing operations?

  Question 50

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

  Question 51

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Risks can be analyzed to

  Question 52

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The internal control environment is enhanced by the hiring and retention of competent, honest employees.

  Question 53

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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 54

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In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is deducted from the balance per bank statement.

  Question 55

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A customer's check received in settlement of an account receivable is considered cash.

  Question 56

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Which of the following elements of internal control focuses upon locating weaknesses and improving control effectiveness?

  Question 57

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What adjustment is required in the depositor's accounts to record outstanding checks?

  Question 58

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The depositor reconciles the bank's statement to the depositor's records.

  Question 59

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A check drawn by a depositor for $295 in payment of a liability was recorded as $925. This item would be included on the bank reconciliation as a(n)

  Question 60

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A minimum cash balance maintained in a bank account is called a line of credit.

  Question 61

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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 62

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A check drawn by a depositor for $810 in payment of a liability was recorded by the depositor as $180. This item would be included on the bank reconciliation as a(n)

  Question 63

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Receipts from cash sales of $5,700 were recorded incorrectly by the depositor as $7,500. This item would be included on the bank reconciliation as a(n)

  Question 64

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The bank reconciles its statement to the depositor's records.

  Question 65

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Internal controls are important because they

  Question 66

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A voucher system is an example of an internal control procedure over cash receipts.

  Question 67

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An element of internal control is

  Question 68

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Employing internal auditors is part of which element of internal control?

  Question 69

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The amount of the outstanding checks is included on the bank reconciliation as a(n)

  Question 70

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EFT

  Question 71

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A voucher

  Question 72

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If a business has several bank accounts, it has a separate record for each of them.

  Question 73

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Money market accounts, commercial paper, and U.S. Treasury Bills are examples of cash equivalents.

  Question 74

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The business's organizational structure influences which of the following elements of internal control?

  Question 75

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A firm's internal control environment is influenced by

  Question 76

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"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 77

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The due date of a 60-day note dated July 12 is

  Question 78

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Use the following data to calculate the cost of ending inventory under the FIFO method.

  Question 79

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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 80

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Inventories of merchandising and manufacturing businesses are reported as current assets on the balance sheet.

  Question 81

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The estimate based on the sales method violates the matching principle.

  Question 82

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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 83

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The presentation of net accounts receivable on the balance sheet will be most accurate under the

  Question 84

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Merchandise Inventory is presented on the balance sheet in the current assets section.

  Question 85

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The term "inventory" indicates

  Question 86

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Allowance for Doubtful Accounts has an unadjusted balance of $800 at the end of the year, and an analysis of accounts in the customers ledger indicates doubtful accounts of $15,000. Which of the following records the proper provision for doubtful accounts?

  Question 87

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A 90-day, 8% note for $10,000 dated May 1 is received from a customer on account. The maturity value of the note is

  Question 88

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The amount of the promissory note plus the interest earned on the due date is called the

  Question 89

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

  Question 90

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The direct write-off method records uncollectible accounts expense in the year the specific account receivable is determined to be uncollectible.

  Question 91

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The party promising to pay a note at maturity is the payee.

  Question 92

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The difference between the total receivables and the balance in Allowance for Doubtful Accounts at the end of a period is referred to as the net realizable value of the accounts receivable.

  Question 93

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Other receivables do NOT include

  Question 94

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When the estimate based on analysis of receivables is used, income is reduced when a specific receivable is written off.

  Question 95

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A note receivable due in 90 days is listed on the balance sheet under

  Question 96

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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 97

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When companies sell their receivables to other companies, the transaction is called factoring.

  Question 98

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Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

  Question 99

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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 100

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During deflationary periods, the use of the LIFO method of costing inventory will result in a greater amount of net income than would result from the use of the FIFO method.