GB518 Unit 4 Quiz A Graded

GB518 Unit 4 Quiz A Graded

1. Question : Extraordinary repairs:Are revenue expendituresExtend an assets useful life beyond its original estimateAre credited to accumulated depreciationAre additional costs of plant assets that do not materially increase the assets lifeAre expensed as incurredQuestion 2. Question : 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 accountsQuestion 3. Question : 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$3,166.67Question 4. Question : An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period of the sales and (2) reports accounts receivable at the amount of cash to be collected is the:Allowance method of accounting for bad debtsAging of notes receivableAdjustment method for uncollectible debtsDirect write-off method of accounting for bad debtsCash basis method of accounting for bad debtsQuestion 5. Question : 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 $25,000A loss of $65,000A gain of $65,000A gain of $90,000Question 6. Question : 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 depreciationQuestion 7. Question : 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 statementsQuestion 8. Question : A companys annual accounting period ends on September 30. During the current year a depreciable asset which cost $16,000 was purchased on January 1. The asset has a $2,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 4-year life. What is the total depreciation expense for the current year?$4,000$3,000$3,500$2,625$875Question 9. Question : A copyright:Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 yearsIs an exclusive right granted to its owner to manufacture and sell a device or to use a process for 17 yearsIs an exclusive right granted to its owner to manufacture and sell a device or to use a process for 50 yearsIs the amount by which the value of a company exceeds the fair market value of a companys net assets if purchased separatelyGives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 yearsQuestion 10. Question : Total asset turnover is calculated by dividing:Gross profit by average total assetsAverage total assets by gross profitNet sales by average total assetsAverage total assets by net salesNet assets by total assetsQuestion 11. Question : A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1, 2010. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, 2010?$1,000$1,333$1,533$4,000$4,600Question 12. Question : A 90-day note issued on April 20 has a maturity date of:July 17July 18July 19July 20July 21Question 13. Question : 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 usedQuestion 14. Question : Failure by a promissory notes maker to pay the amount due at maturity is known as:Protesting a noteClosing a noteDishonoring a noteDiscounting a noteDepreciating a noteQuestion 15. Question : The person who signs a note receivable and promises to pay the principal and interest is the:MakerPayeeHolderReceiverOwnerQuestion 16. Question : On December 31, 2010, Stable Company sold a piece of equipment that was purchased on January 1, 2005. The equipment originally cost $820,000 and has an estimated useful life of eight years. Stable uses the straight-line method of depreciation. What is the gain/loss on the sale of equipment that Stable will recognize if the equipment was sold for $230,000?$230,000 Gain$25,000 Loss$25,000 Gain$73,750 Gain. $0; no gain or lossQuestion 17. Question : Amortization:Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful lifeIs the process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its useIs the process of allocating the cost of natural resources to periods when they are consumedIs an accelerated form of expensing an assets costIs the same as depletionQuestion 18. Question : 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 offQuestion 19. Question : 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 yearsQuestion 20. Question : A leasehold:Is a short-term rental agreementIs the same as a patentAre the rights granted to the lessee by the lessor of a leaseIs recorded as rent expenseIs an investment assetQuestion 21. Question : On August 1, 2010, Ace Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $123,965. The note is due in 90 days and has an interest rate of 8%. What would be the total amount collected at the maturity date?$123,965.00$2,479.30$126,444.30$121,485.70$133,882.20Question 22. Question : 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 landQuestion 23. Question : A patent:Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 50 yearsIs an exclusive right granted to its owner to manufacture and sell a device or to use a process for 20 yearsIs an exclusive right granted to its owner to manufacture and sell a device or to use a process for 50 yearsIs the amount by which the value of a company exceeds the fair market value of a companys net assets if purchased separatelyGives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 yearsQuestion 24. Question : The interest accrued on $3,600 at 7% for 60 days is:$36$42$252$180$420Question 25. Question : 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 method


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