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. 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. 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)

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