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20 May 2019

1 of 50

Investments in debt securities, such as bonds, may be classifiedas either current or long-term assets.

True
False

Question

2 of 50

Marketable securities that are held until the due date of thesecurities are

trading and held-to-maturitysecurities.
available-for sale securities.
held-to-maturity securities.
trading securities.

Question

3 of 50

Which of the following business types is most common as measuredby the amount of business transacted?

Government entities
Proprietorships
Partnerships
Corporations

Question

4 of 50

Depreciation is based upon cost, useful life, and salvagevalue.

True
False

Question

5 of 50

Because depreciation is not cash-based, it is NOT reported inthe direct method of the statement of cash flows.

True
False

Question

6 of 50

A company has a petty cash fund of $200. At the end of themonth, $6.41 remains in the fund along with $190.96 in variousreceipts. The journal entry to replenish the fund would show adebit(s) to

various expenses for $190.96 andCash Short of $2.63.
Cash for $190.96.
Cash for $193.59.
various expenses for $190.96 andCash Over of $2.63.

Question

7 of 50

A 12-month, 8% note dated August 1, 2013 for $5,000 would haveaccrued interest payable on December 31, 2013 of $166.67.

True
False

Question

8 of 50

Warranty expense must be estimated and matched to revenues.

True
False

Question

9 of 50

Upgrading the RAM on a computer would be an example of a(n)

capital expense.
betterment.
ordinary repair.
extraordinary repair.

Question

10 of 50

The formula for the quick ratio is quick assets divided bynoncurrent assets.

True
False

Question

11 of 50

Which of the following are considered to be legal entities thatexist separate and distinct from their owners?

Sole proprietorships
Organizations with more than 100partners
Partnerships
Corporations

Question

12 of 50

Patents and copyrights can be seen, held, or touched.

True
False

Question

13 of 50

Which of the following would be considered part of the cost ofmachinery and equipment?

Repairs after start-up
Insurance after purchase
Maintenance
Sales taxes

Question

14 of 50

The business or person that signs the note and promises to paythe required amount is called the payee.

True
False

Question

15 of 50

Conley Company has a petty cash fund of $300. At the end of themonth, $42.38 remains in the fund along with $260.75 in variousreceipts. The journal entry to replenish the fund would bedebit

Petty Cash for $257.62 and creditCash for $257.62.
various expenses, $260.75 andcredit Cash for $260.75.
various expenses, $260.75, creditCash Over for $3.13, and credit Cash for $257.62.
various expenses, $254.49, debitCash Short for $3.13, and credit Cash for $257.62.

Question

16 of 50

Neither land nor land improvements are depreciated.

True
False

Question

17 of 50

Using a 365-day year, the maturity value of a 180-day note for$2,700 at 9% annual interest is (rounded to the nearest cent)

$2,819.84.
$2,821.50.
$2,943.00.
$ 119.84.

Question

18 of 50

On January 1, Bestway, Inc. signed a $175,000, 8%, 30-yearmortgage that requires semiannual payments of $7,735 on June 30 andDecember 31 of each year. The journal entry to record the secondsemiannual payment would be (round interest calculation to thenearest dollar) to

debit Interest expense, $764; debitMortgage payable, $6,971; credit Cash, $7,735.
debit Mortgage payable, $7,735;credit Cash, $7,735.
debit Interest expense, $6,971;debit Mortgage expense, $764; credit Cash, $7,735.
debit Interest expense, $6,971;debit Mortgage payable, $764; credit Cash, $7,735.

Question

19 of 50

Allied Industries purchased a piece of equipment for $65,000with an estimated salvage value of $15,000 on January 1. Itsestimated life is five years. To the nearest dollar, what is theequipment's depreciation using double-declining-balance for yeartwo?

$ 26,000
$ 12,000
$ 20,000
$ 15,600

Question

20 of 50

Payroll is also called employee compensation and can consist ofmany parts.

True
False

Question

21 of 50

The number of shares of stock that a corporation is given theright to sell is called

authorized stock.
issued stock.
outstanding stock.
capital stock.

Question

22 of 50

Which of the following would NOT be considered part of the costof machinery and equipment?

In-transit insurance costs
Delivery charges
Installation costs
Repairs and maintenance afterstart-up

Question

23 of 50

Equipment costing $118,000 has accumulated depreciation of$92,000. The equipment is a trade-in for new equipment costing$187,000. If the trade-in value received for the old equipment is$30,000, the journal entry to record this transaction is to

debit Equipment (New) for $187,000,debit Accumulated Depreciation – Equipment for $92,000, creditEquipment (Old) for $118,000, and credit Cash for $161,000.
debit Equipment (New) for $187,000and credit Cash for $187,000.
debit Accumulated Depreciation –Truck for $50,000, debit Loss on Disposal $6,000, and credit Truckfor $56,000.
debit Equipment (New) for $187,000,debit Accumulated Depreciation – Equipment for $92,000, debit Losson Exchange of Assets for $26,000, credit Equipment (Old) for$118,000 and credit Cash for $187,000.

Question

24 of 50

Liberty Company has declared a $40,000 cash dividend toshareholders. The company has 5,000 shares of $20-par, 6% preferredstock and 10,000 shares of $15-par common stock. The preferredstock is cumulative. How much will be distributed to the preferredand common stockholders on the date of payment if the preferredstock is $12,000 in arrears?

$18,000 preferred, $22,000common
$20,000 preferred, $20,000common
$6,000 preferred, $34,000common
$40,000 preferred, $0 common

Question

25 of 50

In accounting, what is the meaning of capitalized?

Capitalized means that a given cityhas been selected as a government center.
Capitalized means that the cost ofan asset is recorded as a debit (increase) to expense.
Capitalized means that a liabilityaccount is credited (increase
Capitalized means that an assetaccount is debited (increased) for the cost of an asset.

Question

26 of 50

Interest is an expense to the debtor and income to thecreditor.

True
False

Question

27 of 50

Cash consists of anything that a bank will take as adeposit.

True
False

Question

28 of 50

The cost of long-term assets must be allocated to an expense asthe asset is used up.

True
False

Question

29 of 50

The process of acquiring merchandise from a supplier begins withthe

purchase order.
check for payment.
receiving report.
invoice.

Question

30 of 50

Appleway Corporation purchases a machine for $125,000. It has anestimated salvage value of $10,000 and is expected to produce50,000 units in its lifetime. During the first year of operation,it produced 14,500 units. To the nearest dollar, the depreciationfor the first year under the units of production method will be

$35,500.
$31,250.
$36,250.
$33,350.

Question

31 of 50

Book value is depreciable cost minus accumulateddepreciation.

True
False

Question

32 of 50

The records of Inland Equipment showed a net loss of $30,000,depreciation expense of $25,000, and an increase in supplies onhand of $5,000. The amount of net cash flow from operatingactivities using the indirect method is

($10,000).
$15,000.
$20,000.
($15,000).

Question

33 of 50

Retained earnings represent internally generated capital.

True
False

Question

34 of 50

A company issues 15,000 shares of its $25 par common stock for$29 per share. The amount to be debited to Cash is

$435,000.
$375,000.
$405,000.
$ 60,000.

Question

35 of 50

On September 1, 2012, Juno Corp. lent $2,400 to Bill Askins on asix-month 8% promissory note. The journal entry to record the notefor Juno Corp. would be to:

debit Note Receivable/Tim, $2,400;credit Cash, $2,400.
debit Note Receivable/Tim, $96;credit Interest Income, $96.
debit Note Receivable/Tim, $2,496;credit Cash, $2,496.
debit Cash, $2,400; credit NotePayable/Tim, $2,400.

Question

36 of 50

Separation of duties is essential for internal control over cashreceipts and cash payments.

True
False

Question

37 of 50

Which of the following would indicate poor internal control overaccounts receivable?

The same person handling cashreceipts also records the accounts receivable transactions.
The person handling cash receiptspasses the receipts to someone who enters them into accountsreceivable.
The mailroom employees open themail and give the cash receipts to another employee.
The person who handles accountsreceivable would not write off accounts as uncollectible.

Question

38 of 50

Limited liability means that the stockholders of a corporationshare a personal liability for all debts of the corporation.

True
False

Question

39 of 50

Accumulated depletion is a(n)

contra-asset account.
cash account.
contra-liability account.
expense account.

Question

40 of 50

Allied Industries reported net income of $52,000, depreciationexpenses of $13,000, a gain on a land sale of $3,000, and adecrease in accounts receivable of $1,500. Under the indirectmethod, net cash flows from operations is

$63,500.
$66,500.
$69,500.
$60,555.

Question

41 of 50

The portion of stockholders' equity that can be used fordividends is referred to as legal capital.

True
False

Question

42 of 50

Franklin Industries had total assets of $560,000; totalliabilities of $250,000; and total stockholders' equity of$310,000. Franklin Industries debt ratio is

55.4%.
28.7%.
44.6%.
80.6%.

Question

43 of 50

Financial analysis is used to predict the future of abusiness.

True
False

Question

44 of 50

Online banking should NOT be used to reconcile the bankaccount.

True
False

Question

45 of 50

Costs of testing machinery or equipment before they are usedwould be included in the price of the machinery or theequipment.

True
False

Question

46 of 50

There are two methods for accounting for uncollectiblereceivables.

True
False

Question

47 of 50

Assets that are NOT expected to provide benefits for a number ofaccounting periods are called

current assets.
property, plant, andequipment.
long-term assets.
natural resources.

Question

48 of 50

The allowance method of accounting for bad debts is required byGAAP because of the materiality principle.

True
False

Question

49 of 50

A stock dividend affects total stockholders' equity.

True
False

Question

50 of 50

Realized gains and losses only occur when the security is soldfor more or less than the original cost.

True
False

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Tod ThielLv2
21 May 2019

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Related questions

Questions for a practice study test for final. Use ABCD in youranswer instead of writing it out. Thank You!

1 of 35

Which of the following would NOT be considered part of the costof a constructed building?

Contractor charges
Architectural fees
Building permit fees
Realtor commissions

Question

2 of 35

Under the direct write-off method, to record the receipt of cashafter an account has previously being written off, you wouldfirst

debit Bad Debt Expense.
debit Allowance for DoubtfulAccounts.
reinstate the customer'saccount.
debit Cash and credit thecustomer's account.

Question

3 of 35

Which of the following would be considered a naturalresource?

Wheat
Corn
Livestock
Timber

Question

4 of 35

An asset has a cost of $50,000 with a residual value of $10,000.It has a life of 5 years and was purchased on January 1. Its fourthfull year of depreciation expense under double-declining-balancewill be

$7,200.
$800.
$4,320.
$0.

Question

5 of 35

Which would be considered part of land improvements?

Signs
Removing unwanted buildings fromthe land
Fencing
In-ground sprinkler systems

Question

6 of 35

Cesario Corporation purchases a machine for $125,000. It has anestimated salvage value of $10,000 and is expected to produce50,000 units in its lifetime. During the first year of operation,it produced 14,500 units. To the nearest dollar, the depreciationfor the first year under the units of production method will be

$35,500.
$33,350.
$36,250.
$31,250.

Question

7 of 35

When using the allowance method for uncollectible accounts, theaging method is called the

Allowance approach.
Income Statement approach.
Direct write-off approach.
Balance Sheet approach.

Question

8 of 35

Which of the following would be considered a cashequivalent?

Time deposits
Checks
Currency
Money orders

Question

9 of 35

Leo Company has a petty cash fund of $300. At the end of themonth, $42.38 remains in the fund along with $260.75 in variousreceipts for purchases. The journal entry to replenish the fundwould be

debit various expenses, $260.75,and credit Cash for $260.75.
debit Petty Cash for $257.62, andcredit Cash for $257.62.
debit various expenses, $260.75;credit Cash Over for $3.13, and credit Cash for $257.62.
debit various expenses, $254.49;debit Cash Short for $3.13, and credit Cash for $257.62.

Question

10 of 35

Gallego & Co. reported sales of $515,000; beginning netAccounts Receivable of $212,000; and ending net Accounts Receivableof $224,000. Gallego & Co.'s receivable collection period(rounded to the nearest day) is

159.
150.
106.
155.

Question

11 of 35

When companies extend credit to customers

the likelihood of not collectingmoney from customers increases.
sales generally decrease.
the likelihood of not collectingmoney from customers decreases.
the amount of business stays thesame.

Question

12 of 35

Lionworks Company has cash of $143,000; net Accounts Receivableof $89,000; short-term investments of $35,000; and prepaid expensesof $40,000. It also has $50,000 in current liabilities and $80,000in long-term liabilities. The quick ratio for Lionworks Companyis

6.14.
5.34.
3.34.
4.64.

Question

13 of 35

Which of the following is NOT true concerning NSF checks?

NSF checks represent customerchecks that the business previously deposited but have turned outto be worthless.
The amount of the NSF check willneed to be added to the book balance.
NSF stands for nonsufficientfunds.
The amount of the NSF check willneed to be subtracted from the book balance.

Question

14 of 35

Leo's Lawn Care purchased equipment on January 1. The cost was$15,000, and the equipment had a residual value of $4,000. Theequipment was given a useful life of 7 years. After the end of twoyears, it was determined that the equipment would be obsolete in 3more years, and the residual value would still be $4,000. What willbe the depreciation under the straight-line method to the nearestdollar for the third year?

$2,619
$7,857
$3,142
$1,571

Question

15 of 35

Goodwill is defined as

liabilities minus assets.
the acquisition costs of afranchise.
excess of the cost of the purchaseof a business over the market value of its net assets.
assets minus liabilities.

Question

16 of 35

During the month, Evergreen Roofing settled $300 in warrantyclaims by replacing defective flashing. Evergreen uses an estimatedwarranty account. The journal entry to record the settled claimswould have been

debit Warranty Expense $300; creditCash $300.
debit Estimated Warranty Payable$300; credit Inventory $300.
debit Estimated Warranty Payable$300; credit Cash $300.
debit Warranty Expense $300; creditEstimated Warranty Payable $300.

Question

17 of 35

TLR Productions reported Interest expense of $8,300, Income taxexpense of $26,400, and Net income of $88,700. TLR's interestcoverage ratio is (rounded to three decimals)

0.067.
0.072.
14.867.
13.867.

Question

18 of 35

The entry to record S&C, Inc. selling 1,000 shares of $12par common stock for $20 per share would be to

debit Cash $12,000; debit Paid-InCapital in Excess of Par–Common $8,000; credit Common Stock$20,000.
debit Cash $12,000; credit CommonStock $12,000.
debit Cash $20,000; credit CommonStock $20,000.
debit Cash $20,000; credit CommonStock $12,000; credit Paid-In Capital in Excess of Par-Common Stock$8,000.

Question

19 of 35

The entry to record selling 300 shares of stated value $60common stock for $70 per share would be

debit Cash $21,000; credit CommonStock $18,000; credit Paid-in Capital in Excess of StatedValue–$3,000.
debit Cash $21,000; credit CommonStock $21,000.
debit Cash $18,000; debit Paid-inCapital in Excess of Stated Value–$3,000; credit Common Stock$21,000.
debit Cash $18,000; credit CommonStock $18,000.

Question

20 of 35

Salty's Seafood has 2,000 shares of $10-par common stockoutstanding. During the current year, the company distributed a 10%stock dividend. The market value of the stock at that time was$16/share. After the distribution, Salty's total Stockholders'Equity should increase or decrease by

$1,200.
$2,000.
($3,200).
$0.

Question

21 of 35

The rate of interest that is printed on a bond is called the________ rate of interest.

variable
stated
maturity
market

Question

22 of 35

The adjusting entry to record incurred but not yet paid employeewages includes

a debit to Cash.
a debit to Wages Payable.
a debit to Wages Expense.
a debit to Wages Earned.

Question

23 of 35

At least one class of stock MUST have

voting rights.
liquidation rights.
preemptive rights.
dividend rights.

Question

24 of 35

On October 31, 2014, Aspen Inc. recorded their semiannual bondinterest expense that contained a credit to Discount on bondspayable of $1,200. The adjusting entry on December 31, 2014 willshow a credit to Discount on bonds payable of

$400.
$600.
$800.
$1,200.

Question

25 of 35

Charmed, Inc. reacquired 5,000 shares of its $15-par commonstock for $13/share. The debit to Treasury Stock will be

$65,000.
$75,000.
$10,000.
based on the last treasury stocktransaction.

Question

26 of 35

The basic unit of stock is called a(n)

authorization.
ownership record.
certificate.
share.

Question

27 of 35

Accrued liabilities, such as interest payable, would beconsidered a(n)

unknown liability.
known liability.
contingent liability.
estimated liability.

Question

28 of 35

By NOT accruing warranty expense

reported expenses will beunderstated, and net income will be understated.
reported expenses will beoverstated, and reported liabilities will be understated.
reported liabilities will beunderstated, and net income will be overstated.
reported liabilities will beoverstated, and net income will be understated.

Question

29 of 35

Which of the following would NOT be a liability?

An obligation that is estimated inamount
The signing of a three-yearemployment contract at a fixed annual salary
A note payable with no specificmaturity date
An obligation to provide goods orservices in the future

Question

30 of 35

One type of liability that is easy to overlook is a(n)

tax liability.
account payable.
contingent liability.
note payable.

Question

31 of 35

Inventory turnover measures the relationship between

total assets and merchandiseinventory.
cost of goods sold and totalliabilities.
cost of goods sold and merchandiseinventory.
merchandise inventory and currentliabilities.

Question

32 of 35

Transactions involving the purchase and sale of long-termassets, lending money, and collecting the principal on loans arecalled

operating activities.
investing activities.
financing activities.
buying and selling activities.

Question

33 of 35

The Statement of Cash Flows reports the sources and uses of cashfrom all of the following EXCEPT

financing activities.
managerial activities.
operating activities.
investing activities.

Question

34 of 35

Which of the following ratios measures the earnings of a companyon each dollar of assets invested?

Return on equity
Return on assets
Return on sales
Current ratio

Question

35 of 35

Are all decreases to cash the result of an unfavorablesituation?

No. Cash could decrease as a resultof acquiring long-term assets the company needs to expand or staycompetitive.
Yes. Cash could decrease as aresult of paying off long-term debt, which is an unfavorable actionto take.
No. Cash could decrease because thecompany issued more stock.
Yes. Decreases to cash are alwaysbad.

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