Week 1 Quiz

Practice Question 01

What type of receivable is evidenced by a formal instrument and normally requires the payment of interest?

An account receivable

A note receivable
 

A trade receivable


Past-due accounts receivables

 

Practice Question 03

Corristan Company purchased equipment and incurred these costs:

  

Cash price


$24,000

 

Sales taxes


1,200

 

Insurance during transit


200

 

Annual maintenance costs


____400

 

Total costs


$25,800

 What amount should be recorded as the cost of the equipment?

$24,000

$25,200


$25,400

$25,800

 

Practice Question 05

When is a receivable recorded by a service organization?

When the bill is sent to the customer
 

When the customer pays
 

When the related expenses are incurred

When service is provided   on account

 

Practice Question 10

At what value are accounts receivable reported on the balance sheet?

 

Present value

 

Fair market value


Maturity value

Cash (net) realizable   value

 

Practice Question 21

Short-term notes receivable are reported at their cash (net) realizable value.

True


False


Practice Question 25

Which one of these statements about promissory notes is incorrect?
 

The party to whom payment is to be made is called the payee.

A promissory note is not   a negotiable instrument.

A promissory note is more liquid than an account receivable.

The party making the promise to pay is called the maker.

 

Practice Question 05

Which of the following is not a depreciable asset?

Equipment

Buildings

Land

Land improvements

 

Practice Question 24

At the beginning of the year, Powers Company purchased a piece of machinery for $50,000. It has a salvage value of $5,000, an estimated useful life of 9 years, and estimated units of output of 90,000 units. Actual units produced during the first year were 11,000. How much is depreciation expense for the first year under the straight-line method?
 

$5,300


$5,556


$5,500


$5,000


Practice Question 34

On April 1, 2017, La Presa Company sells some equipment for $18,000. The original cost was $50,000, the estimated salvage value was $8,000, and the expected useful life was 6 years. On December 31, 2016, the Accumulated Depreciation account had a balance of $29,400. How much is the gain or loss on the sale?

$300 gain
 

$850 loss

$5,400 gain

$2,600 loss

 

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