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

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 methodAging of accounts receivable methodPercentage of sales methodAging of investments methodPercent of accounts receivable method2. 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? 10.1717.95 7.787.184.073. Most employees and employers are required to pay: Local payroll taxesState payroll taxesFederal payroll taxesBoth B and C onlyLocal, state and federal payroll taxes4. Sales taxes payable: Is an estimated liabilityIs a contingent liabilityIs a current liability for retailersIs a business expenseIs a long-term liability5. 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$3,166.676. 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 employers total FICA payroll tax for this employee is: $62.35$266.60$328.95 $657.907. Amounts received in advance from customers for future products or services: Are revenuesIncrease incomeAre liabilitiesAre not allowed under GAAPRequire an outlay of cash in the future8. Pepsis accounts receivable turnover was 9.9 for this year and 11.0 for last year. Cokes turnover was 9.3 for this year and 9.3 for last year. These results imply that: Coke has the better turnover for both yearsPepsi has the better turnover for both yearsCokes turnover is improvingCokes credit policies are too looseCoke is collecting its receivables more quickly than Pepsi in both years9. Obligations due to be paid within one year or within the companys operating cycle, whichever is longer, are: Current assetsCurrent liabilitiesEarned revenuesOperating cycle liabilitiesBills10. The maturity date of a note receivable:Is the day of the credit saleIs the day the note was signedIs the day the note is due to be paidIs the date of the first paymentIs the last day of the month11. 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 $25,000A gain of $25,000 A loss of $65,000A gain of $65,000A gain of $90,00012. The interest accrued on $3,600 at 7% for 60 days is: $36$42 $252$180$42013. 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 years5 years7 years 8 years10 years14. The useful life of a plant asset is:The length of time it is used productively in a companys operationsNever related to its physical lifeIts productive life, but not to exceed one yearDetermined by the FASBDetermined by law15. 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 companys total asset turnover is equal to:0.820.901.091.11 1.2616. Times interest earned is calculated by:Multiplying interest expense times incomeDividing interest expense by income before interest expenseDividing income before interest expense and any income tax by interest expenseDividing interest and income tax expense by income before interest and income tax expense17. Advance ticket sales totaling $6,000,000 cash would be recognized as follows:Debit Sales, credit Unearned RevenueDebit Unearned Revenue, credit SalesDebit Cash, credit Unearned RevenueDebit Unearned Revenue, credit Cash18. Depreciation: Measures the decline in market value of an assetMeasures physical deterioration of an assetIs the process of allocating to expense the cost of a plant assetIs an outflow of cash from the use of a plant assetIs applied to land19. A company has net sales of $870,000 and average accounts receivable of $174,000. What is its accounts receivable turnover for the period?0.205.00 20.073.01,82520. 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$230.0021. Depletion:Is the process of allocating the cost of natural resources to periods in which they are consumedIs also called depreciationIs also called amortizationIs an unrealized expense reported in equityIs the process of allocating the cost of intangibles to periods in which they are used22. The matching principle requires:That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement userThe use of the direct write-off method for bad debtsThe use of the allowance method of accounting for bad debtsThat bad debts be disclosed in the financial statementsThat bad debts not be written off23. Revenue expenditures:Are additional costs of plant assets that do not materially increase the assets life or its productive capabilitiesAre known as balance sheet expendituresExtend the assets useful lifeSubstantially benefit future periodsAre debited to asset accounts24. Many companies use accelerated depreciation in computing taxable income because:It is required by the tax rulesIt is required by financial reporting rulesIt postpones tax payments until later years and the company can use the resources now to earn additional income before payment is dueUsing it causes a company to use higher income in the early years of the assets useful lifeThe results are identical to straight-line depreciation25. A change in an accounting estimate is: Reflected in past financial statementsReflected in future financial statements and also requires modification of past statementsA 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 judgmentNot allowed under current accounting rulesConsidered an error in the financial statements


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