Question

Questions for a practice study test for final. Use ABCD in youranswer instead of writing it out. Thank You!

1 of 35

Which of the following would NOT be considered part of the costof a constructed building?

	Contractor charges
	Architectural fees
	Building permit fees
	Realtor commissions

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2 of 35

Under the direct write-off method, to record the receipt of cashafter an account has previously being written off, you wouldfirst

	debit Bad Debt Expense.
	debit Allowance for DoubtfulAccounts.
	reinstate the customer'saccount.
	debit Cash and credit thecustomer's account.

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3 of 35

Which of the following would be considered a naturalresource?

	Wheat
	Corn
	Livestock
	Timber

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4 of 35

An asset has a cost of $50,000 with a residual value of $10,000.It has a life of 5 years and was purchased on January 1. Its fourthfull year of depreciation expense under double-declining-balancewill be

	$7,200.
	$800.
	$4,320.
	$0.

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5 of 35

Which would be considered part of land improvements?

	Signs
	Removing unwanted buildings fromthe land
	Fencing
	In-ground sprinkler systems

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6 of 35

Cesario Corporation purchases a machine for $125,000. It has anestimated salvage value of $10,000 and is expected to produce50,000 units in its lifetime. During the first year of operation,it produced 14,500 units. To the nearest dollar, the depreciationfor the first year under the units of production method will be

	$35,500.
	$33,350.
	$36,250.
	$31,250.

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7 of 35

When using the allowance method for uncollectible accounts, theaging method is called the

	Allowance approach.
	Income Statement approach.
	Direct write-off approach.
	Balance Sheet approach.

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8 of 35

Which of the following would be considered a cashequivalent?

	Time deposits
	Checks
	Currency
	Money orders

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9 of 35

Leo Company has a petty cash fund of $300. At the end of themonth, $42.38 remains in the fund along with $260.75 in variousreceipts for purchases. The journal entry to replenish the fundwould be

	debit various expenses, $260.75,and credit Cash for $260.75.
	debit Petty Cash for $257.62, andcredit Cash for $257.62.
	debit various expenses, $260.75;credit Cash Over for $3.13, and credit Cash for $257.62.
	debit various expenses, $254.49;debit Cash Short for $3.13, and credit Cash for $257.62.

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10 of 35

Gallego & Co. reported sales of $515,000; beginning netAccounts Receivable of $212,000; and ending net Accounts Receivableof $224,000. Gallego & Co.'s receivable collection period(rounded to the nearest day) is

	159.
	150.
	106.
	155.

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11 of 35

When companies extend credit to customers

	the likelihood of not collectingmoney from customers increases.
	sales generally decrease.
	the likelihood of not collectingmoney from customers decreases.
	the amount of business stays thesame.

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12 of 35

Lionworks Company has cash of $143,000; net Accounts Receivableof $89,000; short-term investments of $35,000; and prepaid expensesof $40,000. It also has $50,000 in current liabilities and $80,000in long-term liabilities. The quick ratio for Lionworks Companyis

	6.14.
	5.34.
	3.34.
	4.64.

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13 of 35

Which of the following is NOT true concerning NSF checks?

	NSF checks represent customerchecks that the business previously deposited but have turned outto be worthless.
	The amount of the NSF check willneed to be added to the book balance.
	NSF stands for nonsufficientfunds.
	The amount of the NSF check willneed to be subtracted from the book balance.

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14 of 35

Leo's Lawn Care purchased equipment on January 1. The cost was$15,000, and the equipment had a residual value of $4,000. Theequipment was given a useful life of 7 years. After the end of twoyears, it was determined that the equipment would be obsolete in 3more years, and the residual value would still be $4,000. What willbe the depreciation under the straight-line method to the nearestdollar for the third year?

	$2,619
	$7,857
	$3,142
	$1,571

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15 of 35

Goodwill is defined as

	liabilities minus assets.
	the acquisition costs of afranchise.
	excess of the cost of the purchaseof a business over the market value of its net assets.
	assets minus liabilities.

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16 of 35

During the month, Evergreen Roofing settled $300 in warrantyclaims by replacing defective flashing. Evergreen uses an estimatedwarranty account. The journal entry to record the settled claimswould have been

	debit Warranty Expense $300; creditCash $300.
	debit Estimated Warranty Payable$300; credit Inventory $300.
	debit Estimated Warranty Payable$300; credit Cash $300.
	debit Warranty Expense $300; creditEstimated Warranty Payable $300.

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17 of 35

TLR Productions reported Interest expense of $8,300, Income taxexpense of $26,400, and Net income of $88,700. TLR's interestcoverage ratio is (rounded to three decimals)

	0.067.
	0.072.
	14.867.
	13.867.

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18 of 35

The entry to record S&C, Inc. selling 1,000 shares of $12par common stock for $20 per share would be to

	debit Cash $12,000; debit Paid-InCapital in Excess of Par–Common $8,000; credit Common Stock$20,000.
	debit Cash $12,000; credit CommonStock $12,000.
	debit Cash $20,000; credit CommonStock $20,000.
	debit Cash $20,000; credit CommonStock $12,000; credit Paid-In Capital in Excess of Par-Common Stock$8,000.

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19 of 35

The entry to record selling 300 shares of stated value $60common stock for $70 per share would be

	debit Cash $21,000; credit CommonStock $18,000; credit Paid-in Capital in Excess of StatedValue–$3,000.
	debit Cash $21,000; credit CommonStock $21,000.
	debit Cash $18,000; debit Paid-inCapital in Excess of Stated Value–$3,000; credit Common Stock$21,000.
	debit Cash $18,000; credit CommonStock $18,000.

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20 of 35

Salty's Seafood has 2,000 shares of $10-par common stockoutstanding. During the current year, the company distributed a 10%stock dividend. The market value of the stock at that time was$16/share. After the distribution, Salty's total Stockholders'Equity should increase or decrease by

	$1,200.
	$2,000.
	($3,200).
	$0.

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21 of 35

The rate of interest that is printed on a bond is called the________ rate of interest.

	variable
	stated
	maturity
	market

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22 of 35

The adjusting entry to record incurred but not yet paid employeewages includes

	a debit to Cash.
	a debit to Wages Payable.
	a debit to Wages Expense.
	a debit to Wages Earned.

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23 of 35

At least one class of stock MUST have

	voting rights.
	liquidation rights.
	preemptive rights.
	dividend rights.

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24 of 35

On October 31, 2014, Aspen Inc. recorded their semiannual bondinterest expense that contained a credit to Discount on bondspayable of $1,200. The adjusting entry on December 31, 2014 willshow a credit to Discount on bonds payable of

	$400.
	$600.
	$800.
	$1,200.

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25 of 35

Charmed, Inc. reacquired 5,000 shares of its $15-par commonstock for $13/share. The debit to Treasury Stock will be

	$65,000.
	$75,000.
	$10,000.
	based on the last treasury stocktransaction.

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26 of 35

The basic unit of stock is called a(n)

	authorization.
	ownership record.
	certificate.
	share.

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27 of 35

Accrued liabilities, such as interest payable, would beconsidered a(n)

	unknown liability.
	known liability.
	contingent liability.
	estimated liability.

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28 of 35

By NOT accruing warranty expense

	reported expenses will beunderstated, and net income will be understated.
	reported expenses will beoverstated, and reported liabilities will be understated.
	reported liabilities will beunderstated, and net income will be overstated.
	reported liabilities will beoverstated, and net income will be understated.

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29 of 35

Which of the following would NOT be a liability?

	An obligation that is estimated inamount
	The signing of a three-yearemployment contract at a fixed annual salary
	A note payable with no specificmaturity date
	An obligation to provide goods orservices in the future

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30 of 35

One type of liability that is easy to overlook is a(n)

	tax liability.
	account payable.
	contingent liability.
	note payable.

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31 of 35

Inventory turnover measures the relationship between

	total assets and merchandiseinventory.
	cost of goods sold and totalliabilities.
	cost of goods sold and merchandiseinventory.
	merchandise inventory and currentliabilities.

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32 of 35

Transactions involving the purchase and sale of long-termassets, lending money, and collecting the principal on loans arecalled

	operating activities.
	investing activities.
	financing activities.
	buying and selling activities.

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33 of 35

The Statement of Cash Flows reports the sources and uses of cashfrom all of the following EXCEPT

	financing activities.
	managerial activities.
	operating activities.
	investing activities.

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34 of 35

Which of the following ratios measures the earnings of a companyon each dollar of assets invested?

	Return on equity
	Return on assets
	Return on sales
	Current ratio

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35 of 35

Are all decreases to cash the result of an unfavorablesituation?

	No. Cash could decrease as a resultof acquiring long-term assets the company needs to expand or staycompetitive.
	Yes. Cash could decrease as aresult of paying off long-term debt, which is an unfavorable actionto take.
	No. Cash could decrease because thecompany issued more stock.
	Yes. Decreases to cash are alwaysbad.