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Submitted by rubyCpaMba on Sun, 2013-11-10 18:13
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1. A method of estimating bad debts expense that involves a detailed examination of outstanding

1. A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:

 

Direct write-off method

Aging of accounts receivable method

Percentage of sales method

Aging of investments method

Percent of accounts receivable method

 

2. If a company had net income of $2,379,600, interest expense of 234,000, a tax rate of 40%, and operating income of 4,200,000, what would the times interest earned ratio be for the company? 

 

10.17

17.95 

7.78

7.18

4.07

 

3. Most employees and employers are required to pay: 

 

Local payroll taxes

State payroll taxes

Federal payroll taxes

Both B and C only

Local, state and federal payroll taxes

 

4. Sales taxes payable: 

 

Is an estimated liability

Is a contingent liability

Is a current liability for retailers

Is a business expense

Is a long-term liability

 

5. Cardco Inc. has an annual accounting period which ends on December 31. During the current year a depreciable asset which cost $42,000 was purchased on September 2. The asset has a $4,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 5 year life. What is the total depreciation expense for the current year? 

 

$1,900.00

$7,600.00

$2,533.33 

$2,800.00

$3,166.67

 

6. An employee earned $4,300 working for an employer. The current rate for FICA social security is 6.2% and the FICA Medicare rate is 1.45%. The employer's total FICA payroll tax for this employee is: 

 

$62.35

$266.60

$328.95 

$657.90

 

7. Amounts received in advance from customers for future products or services: 

 

Are revenues

Increase income

Are liabilities

Are not allowed under GAAP

Require an outlay of cash in the future

 

8. Pepsi's accounts receivable turnover was 9.9 for this year and 11.0 for last year. Coke's turnover was 9.3 for this year and 9.3 for last year. These results imply that: 

 

Coke has the better turnover for both years

Pepsi has the better turnover for both years

Coke's turnover is improving

Coke's credit policies are too loose

Coke is collecting its receivables more quickly than Pepsi in both years

 

9. Obligations due to be paid within one year or within the company's operating cycle, whichever is longer, are: 

 

Current assets

Current liabilities

Earned revenues

Operating cycle liabilities

Bills

 

10. The maturity date of a note receivable:

 

Is the day of the credit sale

Is the day the note was signed

Is the day the note is due to be paid

Is the date of the first payment

Is the last day of the month

 

11. A company had a bulldozer destroyed by fire. The bulldozer originally cost $125,000. The accumulated depreciation on it was $60,000. The proceeds from the insurance company were $90,000. The company should recognize: 

 

A loss of $25,000

A gain of $25,000 

A loss of $65,000

A gain of $65,000

A gain of $90,000

 

12. The interest accrued on $3,600 at 7% for 60 days is: 

 

$36

$42 

$252

$180

$420

 

13. A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:

 

2 years

5 years

7 years 

8 years

10 years

 

14. The useful life of a plant asset is:

 

The length of time it is used productively in a company's operations

Never related to its physical life

Its productive life, but not to exceed one year

Determined by the FASB

Determined by law

 

15. A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover is equal to:

 

0.82

0.90

1.09

1.11 

1.26

 

16. Times interest earned is calculated by:

 

Multiplying interest expense times income

Dividing interest expense by income before interest expense

Dividing income before interest expense and any income tax by interest expense

Dividing interest and income tax expense by income before interest and income tax expense

 

17. Advance ticket sales totaling $6,000,000 cash would be recognized as follows:

 

Debit Sales, credit Unearned Revenue

Debit Unearned Revenue, credit Sales

Debit Cash, credit Unearned Revenue

Debit Unearned Revenue, credit Cash

 

18. Depreciation: 

 

Measures the decline in market value of an asset

Measures physical deterioration of an asset

Is the process of allocating to expense the cost of a plant asset

Is an outflow of cash from the use of a plant asset

Is applied to land

 

19. A company has net sales of $870,000 and average accounts receivable of $174,000. What is its accounts receivable turnover for the period?

 

0.20

5.00 

20.0

73.0

1,825

 

20. On October 10, 2010, Printfast Company sells a commercial printer for $2,350 with a one year warranty that covers parts. Warranty expense is project to be 4% of sales. On February 28, 2011, the printer requires repairs. The cost of the parts for the repair is $80 and Printfast pays their technician $150 to perform the repair. What is the warranty liability at the end of 2010? 

 

$49.00

$84.80

$94.00 

$0, there is no liability at the end of 2010

$230.00

 

21. Depletion:

 

Is the process of allocating the cost of natural resources to periods in which they are consumed

Is also called depreciation

Is also called amortization

Is an unrealized expense reported in equity

Is the process of allocating the cost of intangibles to periods in which they are used

 

22. The matching principle requires:

 

That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user

The use of the direct write-off method for bad debts

The use of the allowance method of accounting for bad debts

That bad debts be disclosed in the financial statements

That bad debts not be written off

 

23. Revenue expenditures:

 

Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities

Are known as balance sheet expenditures

Extend the asset's useful life

Substantially benefit future periods

Are debited to asset accounts

 

24. Many companies use accelerated depreciation in computing taxable income because:

 

It is required by the tax rules

It is required by financial reporting rules

It postpones tax payments until later years and the company can use the resources now to earn additional income before payment is due

Using it causes a company to use higher income in the early years of the asset's useful life

The results are identical to straight-line depreciation

 

25. A change in an accounting estimate is: 

 

Reflected in past financial statements

Reflected in future financial statements and also requires modification of past statements

A change in a calculated amount that is part of financial statements that results from new information or subsequent developments and from better insight or                 improved judgment

Not allowed under current accounting rules

Considered an error in the financial statements

 

 

Answer
Submitted by rubyCpaMba on Sun, 2013-11-10 18:16
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xxxxx Final answers xx yellow xxxxxxxxxx

Reporting xxx xxxxxxxxxx Receivables and xxxxxxxxx xxxxxx

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1. A method of xxxxxxxxxx bad debts xxxxxxx that xxxxxxxx a xxxxxxxx examination of xxxxxxxxxxx accounts and their xxxxxx xx xxxx xxxx due xx the: (Points x 2)

       xxxxxx xxxxxxxxx method        Aging xx xxxxxxxx xxxxxxxxxx method        Percentage xx sales method        xxxxx xx xxxxxxxxxxx xxxxxxx       xxxxxxx xx accounts receivable method

x
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xx xx a company had xxx xxxxxx of

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