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kellyamahaffey
Quiz by kellyamahaffey, updated more than 1 year ago
kellyamahaffey
Created by kellyamahaffey over 9 years ago
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Question 1

Question
We normally record a long-term asset at the:
Answer
  • Cost of the asset only
  • Cost of the asset plus all costs necessary to get the asset ready for use
  • Appraised value
  • Cost of the asset, but subsequently adjust it up or down to appraised value

Question 2

Question
Sandwich Express incurred the following costs related to its purchase of a bread machine: Cost of equipment: $20,000; Sales tax (8%): 1,600; Shipping: 2,200; Installation: 1,400; At what amount should they record the bread machine
Answer
  • $20,000
  • 21,600
  • 23,800
  • 25,200

Question 3

Question
Research and development costs generated internally:
Answer
  • Are recorded as research and development assets
  • Are capitalized and then amortized
  • Should be included in the cost of the patent they relate to
  • Should be expensed

Question 4

Question
Which of the following expenditures should be recorded as an expense?
Answer
  • Repairs and maintenence that maintain current benefits
  • Adding a major new component to an existing asset
  • Replacing a major component of an existing asset
  • Successful legal defense of an intangible asset

Question 5

Question
Which of the following will maximize net income by minimizing depreciation expense in the first year of the asset's life?
Answer
  • Short service life, high residual value, and straight-line depreciation.
  • Long service life, high residual value, and straight-line depreciation
  • Short service life, low residual value, and double-declining-balance depreciation
  • Long service life, high residual value, and double-declining-balance depreciation

Question 6

Question
The book value of an asset is equal to the:
Answer
  • Replacement cost
  • Asset's cost less accumulated depreciation
  • Asset's fair value less its historical cost
  • Historical cost plus accumulated depreciation

Question 7

Question
The balance in the Accumulated Depreciation account represents
Answer
  • The amount charged to expense in the current period
  • A contra expense account
  • A cash fund to be used to replace plant assets
  • The amount charged to depreciation expense since the acquisition of the plant asset

Question 8

Question
Which of the following statements is true regarding the amortization of intangible assets?
Answer
  • Intangible assets with a limited useful life are not amortized
  • The service life of an intangible asset is always equal to its legal life
  • The expected residual value of most intangible assets is zero
  • In recording amortization, Accumulated Amortization is always credited

Question 9

Question
Equipment originally costing $95,000 has accumulated depreciation of $30,000. If it sells the equipment for $55,000, the company should record:
Answer
  • No gain or loss
  • A gain of $10,000
  • A loss of $10,000
  • A loss of $40,000

Question 10

Question
The return on assets is equal to the:
Answer
  • Profit margin plus asset turnover
  • Profit margin minus asset turnover
  • Profit margin times asset turnover
  • Profit margin divided by asset turnover

Question 11

Question
Which of following companies earn revenues by selling inventory?
Answer
  • Service companies
  • Manufacturing companies
  • Merchandising companies
  • Both manufacturing and merchandising companies

Question 12

Question
At the beginning of the year, Bennett Supply has inventory of $3,500. During the year, the company purchases an additional $12,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $4,000. What amount will Bennett report for cost of goods sold?
Answer
  • $11,000
  • 11,500
  • 12,000
  • 12,500

Question 13

Question
Which of the following levels of profitability in a multiple-step income statement represents revenues from the sale of inventory less the cost of that inventory?
Answer
  • Gross profit
  • Operating income
  • Income before income taxes
  • Net income

Question 14

Question
Madison outlet has the following inventory transactions for the year: What amount would Madison report for cost of goods sold using FIFO?
Image:
15c03465-503d-4719-a7c9-b65a1c8de2dc (image/jpg)
Answer
  • $2,600
  • 2,900
  • 3,600
  • 3,900

Question 15

Question
Which inventory cost flow assumption generally results in the lowest reported amount for cost of goods sold when inventory costs are rising?
Answer
  • Lower-of-cost-or-market
  • FIFO
  • LIFO
  • Weighted-average cost

Question 16

Question
Using a perpetual inventory system, the purchase of inventory on account would be recorded as:
Answer
  • Debit Cost of Goods Sold; credit Inventory.
  • Debit Inventory; credit Sales Revenue.
  • Debit Purchases; credit Accounts Payable.
  • Debit Inventory; credit Accounts Payable.

Question 17

Question
At the end of a reporting period, Maxwell Corporation determines that its ending inventory has a cost of $1,000 and a market value of $800. What would be the effect(s) of the adjustment to write down inventory to market value?
Answer
  • Decrease total assets
  • Decrease net income
  • Decrease retained earnings
  • All of the above

Question 18

Question
For the year, Simmons Incorporated reports net sales of $100,000, cost of goods sold of $80,000, and an average inventory balance of $40,000. What is Simmons' gross profit ratio?
Answer
  • 20%
  • 25%
  • 40%
  • 50%

Question 19

Question
Using a periodic inventory system, the purchase of inventory on account would be recorded as:
Answer
  • Debit Cost of Goods Sold; credit Inventory.
  • Debit Inventory; credit Sales Revenue.
  • Debit Purchases; credit Accounts Payable
  • Debit Inventory; credit Accounts Payable.

Question 20

Question
Suppose Ajax Corporation overstates its ending inventory amount. What effect will this have on the reported amount of cost of goods sold in the year of the error?
Answer
  • Overstate cost of goods sold
  • Understate cost of goods sold
  • Have no effect on cost of goods sols
  • Not possible to determine with information given

Question 21

Question
Accounts receivable are best described as:
Answer
  • Liabilities of the company that represent the amount owed to suppliers.
  • Amounts that have previously been received from customers.
  • Assets of the company representing the amount owed by customers.
  • Amounts that have previously been paid to suppliers.

Question 22

Question
On March 17, Fox Lumber sells materials to Whitney Construction for $12,000, terms 2/10, n/30. Whitney pays for the materials on March 23. What amount would Fox record as revenue on March
Answer
  • $12,400
  • 11,760
  • 12,000
  • 12,240

Question 23

Question
On March 17, Fox Lumber sells materials to Whitney Construction for $12,000, terms 2/10, n/30. Whitney pays for the materials on March 23. What is the amount of net revenues (sales minus sales discounts) as of March 23?
Answer
  • $0
  • 11,760
  • 12,000
  • 12,240

Question 24

Question
Suppose the balance of Allowance for Uncollectible Accounts at the end of the current year is $400 (credit) before any adjustment. The company estimates future uncollectible accounts to be $3,200. At what amount would bad debt expense be reported in the current year's income statement?
Answer
  • $400
  • $2,800
  • $3,200
  • $3,600

Question 25

Question
Suppose the balance of Allowance for Uncollectible Accounts at the end of the current year is $400 (debit) before any adjustment. The company estimates future uncollectible accounts to be $3,200. At what amount would bad debt expense be reported in the current year's income statement?
Answer
  • $400
  • $2,800
  • $3,200
  • $3,600

Question 26

Question
Kidz Incorporated reports the following aging schedule of its accounts receivable with the estimated percent uncollectible. What is the total estimate of uncollectible accounts using the aging method?
Image:
9cdee7fc-66e8-4b72-9857-dc5b9fae3fc7 (image/jpg)
Answer
  • $1,150
  • $1,900
  • $2,300
  • $5,900

Question 27

Question
The direct write-off method is generally not permitted for financial reporting purposes because:
Answer
  • Compared to the allowance method, it would allow greater flexibility to managers in manipulating reported net income.
  • This method is primarily used for tax purposes.
  • It is too difficult to accurately estimate future bad debts.
  • Expenses (bad debts) are not properly matched with the revenues (credit sales) they help to generate.

Question 28

Question
On January 1, 2012, Roberson Supply borrows $10,000 from Nees Manufacturing by signing a 9% note due in eight months. Calculate the amount of interest revenue Nees will record on September 1, 2012, the date that the note is due
Answer
  • $300
  • $600
  • $900
  • $1,000

Question 29

Question
Fraudulent reporting by management could include:
Answer
  • Fictitious revenues from a fake customer.
  • Improper asset valuation.
  • Mismatching revenues and expenses.
  • All of the above

Question 30

Question
The Sarbanes-Oxley Act (SOX) mandates which of the following?
Answer
  • Increased regulations related to auditor-client relations.
  • Increased regulations related to internal control.
  • Increased regulations related to corporate executive accountability.
  • All of the above

Question 31

Question
What is the concept behind separation of duties in establishing internal control?
Answer
  • Employee fraud is less likely to occur when access to assets and access to accounting records are separated.
  • The company's financial accountant should not share information with the company's tax accountant.
  • Duties of middle-level managers of the company should be clearly separated from those of top executives.
  • The external auditors of the company should have no contact with managers while the audit is taking place.

Question 32

Question
Which of the following is considered cash for financial reporting purposes?
Answer
  • Accounts receivable
  • Investments with maturity dates greater than three months
  • Checks received from customers
  • Accounts payable

Question 33

Question
Which of the following generally would not be considered good internal control of cash receipts?
Answer
  • Allowing customers to pay with a debit card.
  • Requiring the employee receiving the cash from the customer to also deposit the cash into the company's bank account.
  • Recording cash receipts as soon as they are received.
  • Allowing customers to pay with a credit card.

Question 34

Question
Which of the following adjusts the bank's balance of cash in a bank reconciliation?
Answer
  • NSF checks.
  • Service fees.
  • An error by the company.
  • An error by the bank

Question 35

Question
Which of the following adjusts the company's balance of cash in a bank reconciliation?
Answer
  • Interest earned
  • Checks outstanding
  • Deposits outstanding
  • An error by the bank

Question 36

Question
The purpose of a petty cash fund is to:
Answer
  • Provide a convenient form of payment for the company's customers.
  • Pay employee salaries at the end of each period.
  • Provide cash on hand for minor expenditures.
  • Allow the company to save cash for major future purchases.

Question 37

Question
Operating cash flows would include which of the following?
Answer
  • Repayment of borrowed money.
  • Payment for employee salaries.
  • Services provided to customers on account.
  • Payment for a new operating center.

Question 38

Question
A company's free cash flow is calculated as
Answer
  • The amount of cash reported in the balance sheet.
  • Net income less investing cash flows.
  • Operating cash flows plus investing cash flows.
  • Net income plus operating cash flows.

Question 39

Question
Baker Fine Foods has beginning inventory for the year of $12,000. During the year, Baker purchases inventory for $170,000 and ends the year with $24,000 of inventory. Baker will report cost of goods sold equal to:
Answer
  • $150,000
  • 158,000
  • 142,000
  • 170,000

Question 40

Question
Target uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. At the end of the year, Target determined that the ending inventory balances under FIFO and LIFO are $2,970 and $1,490, respectively. At what amount would Target record as a LIFO adjustment for the difference to convert the ending inventory balance from FIFO to LIFO for external reporting purposes?
Answer
  • $1,480
  • 5,011
  • 1,490
  • 2,970

Question 41

Question
NFur CO. started the year with $97,950 of merchandise inventory on hand. During the year, $400,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. NFur paid freight-in charges of $7,500. Merchandise with an invoice amount of $5,000 was returned for credit. Cost of goods sold for the year was $380,000. What is ending inventory?
Answer
  • $112,500
  • $112,550
  • $116,500
  • $120,300

Question 42

Question
What effect would an adjustment to record inventory at the lower-of-cost-or-market have on the company's financial statements?
Answer
  • Increase to assets
  • Increase to stockholder's equity
  • Decrease to inventory
  • Reduction in expense (or cost of goods sold)

Question 43

Question
Merchandise sold FOB shipping point indicates that
Answer
  • The seller holds title until the merchandise is received at the buyer's location
  • The merchandise has not yet been shipped
  • The merchandise will not be shipped until payment has been received
  • The seller transfers title to the buyer once the merchandise leaves the shipper's shipping dock

Question 44

Question
Which of the following would be recorded as land improvements?
Answer
  • Adding a sprinkler system
  • Title insurance
  • Real estate commissions
  • Annual taxes on vehicles

Question 45

Question
Davis Hardware Company uses a perpetual inventory system. How should Davis record the sale of inventory costing $620 for $960 on account ?
Answer
  • Inventory 620 Cost of Goods Sold 620 Sales Revenue 960 Accounts Receivable 960
  • Accounts Receivable 960 Sales Revenues 620 Gain 340
  • Inventory 620 Gain 340 Sales Revenue 960
  • Accounts Receivable 960 Sales Revenue 960 Cost of Goods Sold 620 Inventory 620

Question 46

Question
Angus Steakhouse purchased land for $75,000 cash. They also incurred realtor commissions of $4,000, property taxes of $5,000, and title insurance of $500. The $5,000 in property taxes includes $4,000 in back taxes paid by Angus on behalf of the seller and $1,000 due for the current year after the purchase date. For what amount should Angus record the land?
Answer
  • $83,500
  • $84,500
  • $79,500
  • $75,000

Question 47

Question
Kansas Enterprises purchased equipment for $ 60,000 on Jan. 1, 2015. The equipment is expected to have a four-year life, with a residual value of $4,000 at the end of four years: Using the straight-line method, the book value at December 31, 2016 would be:
Answer
  • $36,000
  • $32,000
  • $33,000
  • $38,000

Question 48

Question
Kansas Enterprises purchased equipment for $ 60,000 on Jan. 1, 2015. The equipment is expected to have a four-year life, with a residual value of $4,000 at the end of four years Using the double-declining balance method, depreciation expense for 2016 would be:
Answer
  • $28,000
  • $15,000
  • $30,000
  • $20,000

Question 49

Question
The factors used to compute depreciation expense for an asset are:
Answer
  • Cost, residual value, and physical life
  • Cost, residual value, and useful life
  • Fair market value, residual value, and economic life
  • None of the above

Question 50

Question
Which of the following best describes credit sales?
Answer
  • Cash sales to customers that are new to the company
  • Sales to customers using credit cards
  • Sales to customers on account
  • Sales with a high risk that the customer will return the product

Question 51

Question
A company provides services account. Indicate how this transaction would affect the following 5 financial statement items:
Answer
  • Assets: Increase Liabilities: Decrease Stockholder's Equity: Increase Revenues: Decrease Expenses: No effect
  • Assets: Increase Liabilities: No effect Stockholder's Equity: Increase Revenues: Increase Expenses: Decrease
  • Assets: Increase Liabilities: No effect Stockholder's Equity: Increase Revenues: Increase Expenses: No effect
  • Assets: No effect Liabilities: No effect Stockholder's Equity: No effect Revenues: No effect Expenses: No effect

Question 52

Question
Lewis Inc. had the following information taken from various accounts for 2015: Sales Discounts: $44,000 Unearned Revenues: $32,000 Total Sales: $459,000 Purchase Discounts: $15,000 Sales allowances: $35,000 Accounts Receivable: $205,000 What was Lewis Inc's net revenues in 2015?
Answer
  • $380,000
  • $434,000
  • $383,000
  • $437,000

Question 53

Question
On July 8, Ray inc sold 100 printers to Office Rental Company at $600each and offered a 3% discount for payment within 10 days. On july 15, Office Rental Company paid the full amount in cash. What should Ray Inc. record on July 15th?
Answer
  • Cash 58,200 Sales Discounts 1,800 Accounts Receivable 60,000
  • Cash 58,800 Accounts Receivable 58,800
  • Cash 58,800 Sales Discounts 1,200 Accounts Receivable 60,000
  • Cash 60,000 Sales Discounts 1,800 Sales Revenue 58,200
  • Cash 60,000 Accounts Receivable 60,000
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