1 of 50
Suppose King Manufacturing
signs a $600,000 note payable to purchase land. King also pays $40,000 in back
property taxes, $10,000 in transfer taxes, $25,000 to remove an old building,
and a $3,000 survey fee. In addition, King had a ground breaking ceremony to
start construction of a new building that costs $1,200. What is the cost of the
land?
$678,000
$679,200
$650,000
$600,000
Question
2 of 50
__________ is the ongoing process of evaluating the internal control
Risk assessment
Monitoring
Control activities
Control environment
Question
3 of 50
Case 10.2
Whirlpool sells $2,120,000 of products in January 2009 on credit. It
is estimated that 3% of the products will be returned for warranty work. At the
end of January, $30,300 of warranty work has been done.
A)
Warranty Expense
30,300
Estimated Warranty Payable
30,300
B)
Estimated Warranty Payable
63,600
Cash
63,600
C)
Warranty Expense
63,600
Estimated Warranty Payable
63,600
D)
Estimated Warranty Payable
30,300
Cash
30,300
Refer to Case 10.2. The journal entry for the warranty work would
be:
A)
B)
C)
D)
Question
4 of 50
Which inventory method uses the average cost for the period for
ending inventory and cost of goods sold?
FIFO
Specific Identification
LIFO
Weighted average
Question
5 of 50
In a company with good internal controls, which department should be
responsible for preparing employee earnings records?
Payroll
Accounting
Human resources
Finance
Question
6 of 50
If it is probable a company will lose a lawsuit and the amount of
loss can be estimated, the company should report the contingency by:
ignoring it and disclose nothing related to the lawsuit.
describing the situation in the footnotes to the financial
statements.
recording an expense
and liability based on estimated amounts.
recording a loss on the balance sheet.
Question
7 of 50
Case 7.10
Jade Co Killian Co
Cash
$10,000 $25,000
Short-term investments
5,000 15,000
Net Receivables
45,000 55,000
Current liabilities
$45,000 $100,000
Refer to Case 7.10. Calculate the Quick ratio for Jade Company.
1.5
1.25
1.0
1.33
Question
8 of 50
Case 9.2
Axel Logistics purchased the
following long term assets with market values:
Asset
Market Value
Equipment
$200,000
Land
$250,000
Furniture
$150,000
Building
$400,000
Refer to Case 9.2. If Axel pays $800,000 for all of the long term
assets in a basket purchase, what amount would be the recorded as the cost of
the land?
$180,000
$200,000
$250,000
$100,000
Question
9 of 50
Notes receivable that are for
longer than one year are considered:
revenues.
current assets.
long term assets.
expenses.
Question
10 of 50
Under the allowance method of
accounting for bad debts, the journal entry for writing off a customers
accounts is:
A)
Allowance for doubtful
accounts
XXXX
Bad Debts Expense
XXXX
B)
Bad Debts Expense
XXXX
Allowance for doubtful
accounts
XXXX
C)
Allowance for doubtful
accounts
XXXX
Cash
XXXX
D)
Accounts Receivable
XXXX
Allowance for doubtful accounts
XXXX
A)
B)
C)
D)
Question
11 of 50
Case 9.2
Axel Logistics purchased the
following long term assets with market values:
Asset
Market Value
Equipment
$200,000
Land
$250,000
Furniture
$150,000
Building
$400,000
Refer to Case 9.2. If Axel pays $800,000 for all of the long term
assets in a basket purchase, what amount would be the recorded as the cost of
the building?
$400,000
$320,000
$600,000
$530,000
Question
12 of 50
Net realizable value of
accounts receivable refers to the:
estimated amount of bad debts.
amount of cash deposited in a bank.
amount customers owe.
amount expected to be
collected from customers.
Question
13 of 50
Which of the following are
purposes of internal control?
One of the purposes of internal control is to encourage employees to
follow company policy.
One of the purposes of internal control is to safeguard the
company’s assets.
One of the purposes of
internal control is to ensure accurate, reliable accounting records.
All of the statements
above are true.
Question
14 of 50
Which inventory costing
method would use the actual cost of each individual unit or product?
FIFO
LIFO
Weighted average
Specific
Identification
Question
15 of 50
Of the following assets which
one would be listed first on the balance sheet?
Prepaid Expenses
Land
Cash
Accounts Receivable
Question
16 of 50
Take home pay is the same as:
net pay.
taxable pay.
average pay.
gross pay.
Question
17 of 50
Case 10.4
Lisa Lay manages the women’s clothing department of Fashion
Department Store. She earns a base monthly salary of $1,000 plus a 6%
commission on her personal sales. Through payroll deductions, Lay donates $35
per month to a charitable organization, and she authorizes Fashion to deduct
$40 monthly for her health insurance. Tax rates on Lay’s earnings are 10% for
income tax and 8% of the first $90,000 for FICA. During the first 11 months of
the year, she earned $81,000.
Refer to Case 10.4. Compute Lay’s net pay for December assuming
$80,000 in sales for December.
$4,681
$1,000
$4,500
$3,615
Question
18 of 50
The allocation of the cost of
a natural resource to expense over its useful life is called:
amortization.
depletion.
depreciation.
production.
Question
19 of 50
Case 9.7
Suppose General Electric
Company (GE) pays $400,000 to acquire a patent on January 1, 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers. GE believes
this patent’s useful life is five years.
Refer to Case 9.7. What is the journal on January 1 to acquire the patent?
A)
Amortization Expense
400,000
Patent
400,000
B)
Amortization Expense
80,000
Accumulated Amortization
80,000
C)
Patent
80,000
Cash
80,000
D)
Patent
400,000
Cash
400,000
A)
B)
C)
D)
Question
20 of 50
Case 9.3
Leah, Inc. has machinery with a cost of $100,000. The machinery has
an estimated useful life of 10 years, and an estimated salvage value of
$10,000. The machinery is expected to be able to produce a total of 1,000,000
units during its estimated life.
Refer to Case 9.3 The amount of deprecation expense in the first
year under double declining balance depreciation would be:
$20,000.
$15,000.
$10,000.
$18,000.
Question
21 of 50
Maggie Moo’s Ice Cream Shop
had a gross pay of $19,000 and a net pay of $13,200 for the latest payroll. The
journal entry to pay the payroll would be:
A)
Salaries Expense
13,200
Cash
13,200
B)
Salaries Payable
19,000
Cash
19,000
C)
Salaries Expense
13,200
Salaries Payable
13,200
D)
Salaries Payable
13,200
Cash
13,200
A)
B)
C)
D)
Question
22 of 50
Case 6.1
Horner Consulting has the following related to its cash account:
Cash account balance
$3,100
Bank statement balance
$3,200
Deposits in transit
$250
Outstanding Checks:
#1001
$50
#1003
$340
#1006
$225
Bank Service charge
$25
NSF check – Customer Gilkey
$240
Refer to Case 6.1. What is the journal entry for the NSF check?
A)
Miscellaneous Expense
240
Cash
240
B)
Cash
240
Accounts Receivable – Gilkey
240
C)
Accounts Receivable – Gilkey
240
Cash
240
D)
Cash
240
Miscellaneous Expense
240
A)
B)
C)
D)
Question
23 of 50
Case 9.5
TD Industries has a piece of
equipment that has a cost of $200,000. The equipment has accumulated
depreciation of $75,000.
Refer to Case 9.5. If the equipment is sold for $120,000, TD will:
debit a loss for $15,000.
debit accumulated
depreciation for $75,000.
credit cash for $120,000.
credit a gain for $5,000.
Question
24 of 50
A signature card is used by banks to help protect against:
inappropriate deposits.
check forgery.
petty cash being stolen.
errors in a bank reconciliation.
Question
25 of 50
Case 9.6
TD Industries has a piece of equipment that has a cost of $400,000.
The equipment has accumulated depreciation of $305,000.
Refer to Case 9.6. If the equipment is sold for $95,000, TD will:
credit a loss for $5,000.
credit equipment for
$400,000.
debit a gain for $5,000.
credit cash for $95,000.
Question
26 of 50
Which of the following would be considered a capital expenditure?
Putting a new heating
a cooling system on a building
Cleaning the carpet on a weekly basis
Regular maintenance of a building
Painting the restrooms of a building
Question
27 of 50
Case 10.3
Lisa Lay manages the women’s clothing department of Fashion
Department Store. She earns a base monthly salary of $1,000 plus a 5%
commission on her personal sales. Through payroll deductions, Lay donates $35
per month to a charitable organization, and she authorizes Fashion to deduct
$40 monthly for her health insurance. Tax rates on Lay’s earnings are 10% for
income tax and 8% of the first $90,000 for FICA. During the first 11 months of
the year, she earned $87,000.
Refer to Case 10.3. Compute Lay’s gross pay for December assuming
$70,000 in sales for December.
$70,000
$4,500
$1,000
$1,700
Question
28 of 50
Lanny Company’s cash account
shows an ending balance of $770. The bank statement shows a $20 service charge
and an NSF check for $100. A $250 deposit is in transit, and outstanding checks
total $400. What is Navarro’s adjusted cash balance?
$1,050
$650
$680
$530
Question
29 of 50
The source document behind a notes receivable is called a(n):
account.
promissory note.
journal entry.
subsidiary ledger.
Question
30 of 50
Inventory shrinkage decreases inventory and:
expenses.
net income.
liabilities.
dividends.
Question
31 of 50
The allocation of the cost of
a plant asset to expense over its useful life is called:
production.
depreciation.
amortization.
depletion.
Question
32 of 50
Case 8.2
Emerson Electronics had the
following information related to its September inventory.
Number of Units Cost
Sept. 1
Beginning Inventory 200 Units $10 6
Purchase 200 Units $12 16
Sold 250 Units 27
Purchase 200 Units $14 30
Sold 300 Units
Sales were made at $15 per unit and Emerson uses the perpetual
inventory system.
Refer to Case 8.2. The value
of cost of goods sold under FIFO would be:
$6,500.
$7,000.
$6,300.
$6,700.
Question
33 of 50
The percentage of sales
method of estimating bad debts is considered to be a(n):
retained earnings statement approach.
balance sheet approach.
cash flows statement approach.
income statement
approach.
Question
34 of 50
For good internal controls over
payroll, which functions should be separated?
Passing out paychecks or pay
stubs
Hiring and firing of employees
Payroll accounting
All of the functions
above should be separated
Question
35 of 50
ABC company signed a 1 year
term note payable on September 1, 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers. The note had an interest rate of 9%.
The journal entry at 12-31-08 would include a:
credit to cash for $900.
credit to account payable for $300.
credit to interest
payable for $300.
credit to notes payable for $900.
Question
36 of 50
Reducing expense to increase
operating profit is representative of:
safeguarding assets
following company policies
promoting operational
efficiency
ensuring accurate, reliable accounting records
Question
37 of 50
Accounts receivable are reported
on the balance sheet at:
estimated value.
net realizable value.
market value.
historical cost.
Question
38 of 50
Which of the following is considered to be a plant asset?
Land improvements
Land
Machinery
All of the above
Question
39 of 50
Case 7.7
Patriot Bank loans P+P
Company $200,000 on a 1 year promissory note on January 1, 2009. The interest
rate of this loan is 8.5%. The principle and interest are due on 12-31-2009.
Refer to Case 7.7. The journal entry to record the receipt of
interest and repayment of the loan on 12-31-09 is:
A)
Cash
200,000
Notes receivable
Interest revenue
183,000
17,000
B)
Cash
217,000
Notes receivable
Interest revenue
200,000
17,000
C)
Notes receivable
200,000
Cash
Interest Revenue
200,000
17,000
D)
Notes payable
200,000
Cash
200,000
A)
B)
C)
D)
Question
40 of 50
Case 8.1
Emerson Electronics had the following information related to its
September inventory.
Number of Units Cost
Sept. 1
Beginning Inventory 100 Units $10 5
Purchase
200 Units $11 15
Sold
150 Units
26
Purchase
100 Units $12 30
Sold 200 Units
Sales were made at $20 per
unit and Emerson uses the perpetual inventory system.
Refer to Case 8.1. The value
of ending inventory under LIFO would be:
$700.
$500.
$600.
$550.
Question
41 of 50
Fraudulent financial
reporting schemes occur when management:
records assets that do not exist.
overstates the value of equipment, buildings, and other long-term
assets.
records revenues prematurely or fictitiously.
acts in any of the
above ways.
Question
42 of 50
Bank service charges would be:
subtracted from the bank balance of a bank reconciliation.
subtracted from the
book balance of a bank reconciliation.
added to the book balance of a bank reconciliation.
added to the bank balaadded to the bank balance of a bank
reconciliation.nce of a bank reconciliation.
Question
43 of 50
Case 10.5
Chip King works as a cook for Damon’s Grill. His straight-time pay
is $10 per hour, with time and a half for hours in excess of 40 per week.
King’s payroll deductions include withheld income tax of 7% of total earnings,
FICA tax of 8% of total earnings, and a weekly deduction of $10 for a
charitable contribution to United Fund.
Refer Case 10.5. Assuming King worked 50 hours during the week,
compute his gross pay for the week.
$600
$550
$400
$500
Question
44 of 50
In accounting, how is goodwill defined?
The excess of the cost to purchase another company over the market
value of its net liabilities
The excess of the cost to purchase another company over the book
value of its net assets
The excess of the
cost to purchase another company over the market value of its net assets
The excess of the cost to purchase another company over the market
value of its cash accounts
Question
45 of 50
Case 9.4
J + J construction has trucks
with a cost of $300,000. The trucks have an estimated useful life of 5 years,
and an estimated salvage value of $20,000. The trucks are estimated to run
200,000 miles during their estimated life.
Refer to Case 9.4. The amount of deprecation expense in the second
year under double declining balance depreciation would be:
$75,200.
$66,000.
$65,000.
$72,000.
Question
46 of 50
Case 8.1
Emerson Electronics had the
following information related to its September inventory.
Number of Units Cost
Sept. 1
Beginning Inventory 100
Units $10 5
Purchase 200
Units $11 15
Sold 150 Units
26
Purchase 100
Units $12 30
Sold 200 Units
Sales were made at $20 per unit and Emerson uses the perpetual
inventory system.
Refer to Case 8.1. The average cost per unit after the September 5
purchase would be:
$11.00.
$10.00.
$10.67.
$9.75.
Question
47 of 50
Ordinary repairs are recorded by:
debiting an expense
account.
crediting an asset account.
crediting an expense account.
debiting an asset account.
Question
48 of 50
Gilkey, Inc. uses the allowance method to account for uncollectible
receivables. At the beginning of the year, Allowance for Doubtful Accounts had
a credit balance of $1,100. During the year you recorded Bad Debt Expense of
$2,000 and wrote off bad receivables of $2,100. What is your year-end balance
in Allowance for Doubtful Accounts?
$2,000
$3,100
$1,000
$3,200
Question
49 of 50
Case 8.2
Emerson Electronics had the
following information related to its September inventory.
Number of Units Cost
Sept. 1
Beginning Inventory 200
Units $10 6
Purchase 200
Units $12 16
Sold 250 Units 27
Purchase 200
Units $14 30
Sold 300 Units
Sales were made at $15 per unit and Emerson uses the perpetual
inventory system.
Refer to Case 8.2. The average cost per unit after the September 27
purchase would be:
$11.
$12.50.
$13.31.
$12.71.
Question
50 of 50
Which of the following is the
correct journal entry for sales of merchandise of $1,000 in cash? The sales tax
rate is 6%.
A)
Cash
1,000
Sales revenue
1,000
B)
Cash
1,060
Sales Revenue
Sales tax payable
1, 000
60
C)
Cash
1,000
Sales Revenue
Sales tax payable
940
60
D)
A/R
1,000
Sales Revenue
1,000
A)
B)
C)
D)
