Accounting Quizzes

depreciation is the process by which

the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset

Using different depreciation methods for book purposes versus tax purposes for the same asset is

the direct result of differing goals of financial and tax accounting

Stockholders prefer to invest in preferred stock because

the dividends are paid on preferred stock before they are paid on common stock

If a company issues $5 par value common stock

$5 per share is presented in the common stock account on the balance sheet.

Which of the following set of the factors is needed to calculated depreciation on plant and equipment

the estimated life of the asset, its acquisition cost, and its estimated residual value

Which of the following items is considered a cash equivalent if held at the balance sheet date

US Treasury bill purchased when there were 90 days until maturity

The current portion of long-term debt is a balance sheet item for Flavor Products Company. How How would it most likely be classified on the balance sheet?

current liability

Which of the following is not classified as a long-term liability

current portion of long-term debt

the effect of recording depreciation for the year is a(n)

decrease in asset and decrease in Net Income

Tropical Co. declared a cash dividend of $30,000. This transaction includes a(n)

decrease to RE of $30,000

A company would repurchase its own stock for all of the following reasons except:

it wishes to make an investment in its own stock

Which balance sheet account are most affected by investing activities

long-term assets

Which of the following would appear on the balance sheet as a current liability

premium offers in cereal boxes

Which of the following is an investing activity

purchase of investment items for cash, purchase of equipment for cash,and sale of land for cash

Which of the following should be classified as an investing activity on the statement of cash flows

sale of a warehouse

The three forms of business entities are

sole proprietorships, partnerships, corporations

The primary purpose of the statement of cash flows is to provide information about

the cash in/outflows of the company

which of the following below is an example of capital expenditure

replacing an engine in a company car

Which of the following is a financing activity

Issuing bonds for cash, purchasing a company's stock (treasury stock) for cash, making a cash payment to repay a loan

On January 2, 2018, Roof Mast Construction , Inc. issued $520,000, 10-year bonds $574,540. The bonds pay interest on June 30 and December 31. The face rate is 8% and the market rate is 6%. At the maturity date, besides an interest payment, Roof Master would repay the bondholders

$520,000

Bonds in the amount of $100,000 and a life of 10 years were issued by the Focus Company. If the face rate is 6% and the interest is paid semiannually, what would be the total amount of interest paid over the life of the bonds?

$60,000

Winslow Corporation reported the following in stockholder's equity section of its balance sheet at December 31, 2015 CS, $1 stated value---$10,000 APIC (CS)--- 40,000 RE---25,000 Total contribute capital and retained earnings---$75,000 Less: Treasury Stock (at cost $20 per share)---(2,000) Total stockholder's equity---$73,000 How many shares of stock are issued

10,000

Which of the following statements is true with respect to long-term liabilities

Long-term liabilities include bonds, other long-term liabilities and deferred income taxes

Which balance sheet account are most affected by operating activities

current assets and liabilities

The Retained Earnings account balance for a corporation is $10,000,000 This amount represents

earnings that have not been distributed to shareholders

Which of the following accounts is classified as a long-term liability

note payable, due in 3 years

Land is not depreciated

will provide future benefits for a company for an unlimited period of time

Bing's export company Co. purchased a new delivery truck at the beginning of 2015. The truck has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2015. The truck was driven 20,000 miles during 2015 and 24,000 miles during 2016. The number of expected miles over five years is 100,000. What is the amount by which double-declining exceeds straight-line depreciation over the 5-year life of the truck?

$0

If a company purchases $3,00 worth of inventory with terms of 1/15, n30 and pays within 15 days, then the amount paid to the seller would be

$2,970

Paxman company purchases a patent for $170,000 at the beginning of 2018 and an estimated that its expected useful life was 10 years. The patent has a legal life of 17 years. What amount should be recorded as amortization expense for the patent in 2018

$10,000

Royal Company purchased a dump at the beginning of 2012 at a cost of $60,000. The truck had an estimated life of 6 years and estimated residual value of $24,000. On January 1, 2014, the company made major repairs of $20,000 to the truck that extended the life 1 year. Thus, starting with 2014, the truck has a remaining life of 5 years and a new salvage value of $8,000. Royal uses the straight-line depreciation method. What amount should be recorded as depreciation expense each year starting in 2014?

$12,000

If current assets amount to $150, total assets $350, current liabilities $65, and total liabilities $100 then working capital is

$85

Carrington, Inc. recorded $97,000 in salaries expense for January, 2019. Its beginning balance in salaries payable was $3,000 and its ending balance was $4,000. How much was paid in cash for salaries during January, 2019

$97,000

If current assets amount to $62,000, total assets $350,000, current liabilities $31,000, and total liabilities $125,000, then the current ratio is

2.0 to 1

Vegas Finance Company reported the following: CS, $10 par 100,000 shares authorized, 80,000 shares issued and outstanding What is the effect of issuing 1,000 shares of common stock at $15 per share

APIC increases $5,000

Valor Company issued 5,000 shares of $1 par common stock for $30 preacher, providing the company with $150,000 in cash. What effect, in addition to the increase in cash, does this transaction have in the account?

Common Stock increases $5,000; APIC-CS increases $145,000

Which of the following statements regarding contingencies it true

They are probable and not estimable are disclosed in the notes to the financial statements

On January 2, 2013 Hannah Company sold a machine for $1,000 that it had used for several years. The machine costs $12,000 and had accumulated depreciation of $9,000 at the time of sale. What gain or loss will be reported on the income statement for the sale of machine?

Loss of $2,000

Borden Company incurred the following costs to acquire and prepare land for a new parking lot: purchase price for land, cost to clear land, cost of paving, lighting for the parking lot, and landscaping for the working lot. How should the company determine which costs should be recorded as Land?

The cost with an unlimited life will increase Land, and the cost with limited useful life will increase Land Improvements

Boston Trombley Company is a defendant in a lawsuit alleging damages of $3 billion. It is possible the Boston Trombley will loose the suit. The litigation is anticipated to continue for several year,but no reasonable estimate can be made at this time regarding ultimate financial responsibility. This situation is an example of

a loss contingency that should be disclosed in the notes to Boston's financial statements

A liability for dividends is created

at the date of declaration

Bonds are a popular source of financing because

bond intrest is deducible for tax purposes, while dividends paid on stock are not

Which of the following is an operating activity

cash collections from credit customers, cash payments for operating expenses, and cash payments

When bond are issuing by a company, the accounting entry shows

increase assets and an increase in liabilities

Operating asset with no physical properties are called

intangible assets

On May 1, the Chris Company borrow $30,000 from the Third Street Bank on a 1-year 6% note. If the company keep its record on a calendar year, an adjustment is needed on December 31 to increase

intrest payable, $1,200