A repair that extends the useful life of an asset would be considered
1.
A repair that extends the useful life of an asset would be considered a/an
A.
extraordinary repair.
B.
betterment.
C.
capital expense.
D.
ordinary repair.
2.
A company receives a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest
cent) will the customer owe using a 360-day year?
A.
$354.38
B.
$38.84
C.
$39.38
D.
$315.00
3.
If the amount extracted from a coal mine was different every year for four years, you would
A.
debit depletion expense for the same amount each year.
B.
use the same depletion expense rate per unit each year.
C.
credit accumulated depletion – coal mine for the same amount each year.
D.
recompute the depletion expense rate per unit each year.
4.
Brandon Corporation purchased a vein of mineral ore for $3,250,000. It is estimated that 15,000,000
tons of ore are available to be extracted. The salvage value is determined to be $400,000. The estimation
depletion expense for this year’s extraction of 1,760,000 tons of ore (rounded to the nearest dollar) is
A.
$381,333.
B.
$428,267.
C.
$334,400.
D.
$400,000.
5.
Research and development costs (R&D) are generally
A.
listed as “current assets” on the balance sheet.
B.
listed as “other intangibles” on the balance sheet.
C.
listed as “long-term assets” on the balance sheet.
D.
expensed and become part of the income statement.
6.
Amanda Industries had total assets of $600,000; total liabilities of $175,000; and total stockholders’
equity of $425,000. Amanda Industries’ debt ratio is
A.
29.2%.
B.
17.1%.
C.
41.2%.
D.
70.8%.
7.
Mackey Company has a five-year mortgage for $100,000. In the first year of the mortgage, Mackey will
report this liability as a
A.
current liability of $80,000 and a long-term liability of $20,000.
B.
current liability of $20,000 and a long-term liability of $80,000.
C.
long-term liability of $100,000.
D.
current liability of $100,000.
8.
Casey Company’s bank statement shows a bank balance of $43,267. The statement shows a bank
service charge of $50 and a bank collection of $760 in Casey Company’s behalf. Casey’s book balance
should be adjusted by a total of
A.
+$710.
B.
+$810.
C.
+$760.
D.
–$710.
9.
Cash equivalents are
A.
not liquid and carry high risk.
B.
not liquid and carry little risk.
C.
very liquid and carry high risk.
D.
very liquid and carry little risk.
10.
Which marketable securities are reported at cost on the balance sheet date?
A.
Held-to-maturity securities
B.
Trading securities
C.
Trading and held-to-maturity securities
D.
Available-for-sale securities
11.
A truck costing $56,000 has accumulated depreciation of $50,000. The truck is scrapped for $500. The
journal entry to record this transaction is
A.
debit Loss on Disposal $6,000, debit Accumulated Depreciation – Truck for $50,000, and credit Truck for $56,000.
B.
debit Cash for $500, debit Accumulated Depreciation – Truck for $50,000, debit Loss on Disposal for $5,500, and credit Truck for $56,000.
C.
debit Cash for $500, debit Loss on Disposal for $55,500, and credit Truck for $56,000.
D.
debit Cash for $500, debit Truck for $50,000, debit Loss on Disposal for $5,500, and credit Accumulated Depreciation -Truck for $56,000.
12.
Meranda Corporation purchases a machine for $125,000. It has an estimated salvage value of $10,000
and is expected to produce 50,000 units in its lifetime. During the first year of operation, it produced
14,500 units. To the nearest dollar, the depreciation for the first year under the units of production method will be
A.
$33,350.
B.
$36,250.
C.
$31,250.
D.
$35,500.
13.
Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B
was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The
amount at which item C should be recorded (rounded to the nearest dollar) is
A.
$72,000.
B.
$29,167.
C.
$83,300.
D.
$50,000.
14.
Brandon Company completed an aging of its accounts receivable and came up with an estimated
amount of $6,342. The credit sales for the period are $85,000. The balance in the allowance for doubtful
accounts is a debit of $817. If Brandon uses 5% of credit sales as its estimating uncollectable accounts,
how much will the credit be to the allowance for doubtful accounts if Brandon uses the estimate of aging receivables as its method of estimating uncollectable accounts?
A.
$5,067
B.
$4,250
C.
$7,159
D.
$5,525
15.
Which of the following would indicate poor internal control over accounts receivable?
A.
The person handling cash receipts passes the receipts to someone who enters them into accounts receivable.
B.
The same person handling cash receipts also records the accounts receivable transactions.
C.
The person who handles accounts receivable wouldn’t write off accounts as uncollectable.
D.
The mailroom employees open the mail and give the cash receipts to another employee.
16.
Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B
was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The
amount at which item B should be recorded is
A.
($55,000/$95,000) × $150,000.
B.
($55,000/$150,000) × $125,000.
C.
($55,000/$95,000) × $125,000.
D.
($55,000/$125,000) × $150,000.
17.
Which of the following would be considered a contingent liability?
A.
Mortgage obligation
B.
Accounts payable obligation
End of exam
C.
Sales tax obligation
D.
Pending legal action
18.
Margaret is a customer of Tammy Company. The company wrote off her account of $1,200 on August
15. On October 12, she sent in a payment of $560. What will Tammy Company record first to reinstate
her account?
A.
Debit Uncollectible Accounts Expense; credit Accounts Receivable/Margaret.
B.
Debit Accounts Receivable/Margaret; credit Allowance for Doubtful Accounts.
C.
Debit Cash; credit Accounts Receivable/Margaret.
D.
Debit Allowance for Doubtful Accounts; credit Accounts Receivable/Margaret.
19.
Using a 360-day year, the maturity value of a 69-day note for $1,500 at 7% annual interest is (rounded
to the nearest cent)
A.
$1,605.00.
B.
$20.13.
C.
$1,584,88.
D.
$1,520.13.
20.
Which of the following is not a benefit to extending credit to customers?
A.
Bad-debt expenses
B.
Wider range of customers
C.
Increased revenues
D.
Increased profits
