Accounting

12. The term used for allocating the cost of an intangible asset to the periods it benefits is:

Amortization

22. The Collins Company sold $200,000 of 10-year bonds for $190,000. The stated rate on the bonds was 8% and interest is paid annually on Dec. 31. What entry would be made on Dec 31 when the interest is paid? (numbers are omitted)

B. Interest Expense Discount on Bonds Payable

14. Potential liabilities on short-term note payable is recorded by:

Contingent liabilities

8. The book value or carrying value of an asset is defined as:

Cost less accumulated depreciation

6. Computing Magazine receives $90 in advance from a customer for 3 year subscription. Computing Magazine's entry to record the receipt of funds would include a:

Credit to unearned subscription revenue for $90

11. An asset that cost 24,000 and has accumulated depreciation of 18,000 is sold for 5,200. The entry to record the sale would include a

Debit to Loss on Sale of Asset for $800

13. Accrued interest on a short-term note payable is recorded by

Debiting Interest Expense and Crediting Interest Payable

20. Which of the following terms does not describe the interest rate printed on the bond certificate?

Effective rate

10. Which of the following is irreverent in computing a machine's depreciation expense using the units-of-production method?

Estimated useful life in years

15. A revenue expenditure usually results in debit to a(n):

Expense account

24. GAAP requires that research and development costs to develop a new product be

Expense in the period incurred

4. A contingent liability is recorded as a journal entry in the accounting records

If it is probable that it will become an actual liability and the amount can be reasonably estimated.

21. If bonds were initially issued at a discount, the carrying value of the bond on the issuer's books will

Increase as the bonds approach their maturity date

25. Stasia, Inc. has a weekly payroll of $8,000 for 5-day work week beginning each Monday and ending each Friday. Stasia's year-end is December 31 st. If December 31st falls on a Wednesday, Stasia would make an adjustment entry to

Increase wages expense by 4,800

7. Which of the following assets is not subject to depreciation, depletion, and amortization?

Land

3. Recording estimated product warranty expense in the year of the sale best follows which of the following accounting principles?

Matching

17. Long-term debt generally includes:

Obligations that extend beyond one year

9. The depreciable cost of an asset is

Original cost minus accumulated depreciation

1. Which of the following most likely would be classified as a current liability?

Salaries payable

2. Which of the following is a tax paid by the employee but not the employer?

State income tax

16. A gain is recorded on the sale of a plant asset when:

The asset is sold for price greater than the asset's book value

18. A convertible bond is one where

The bondholder can convert the bond into common stock at a future time

19. If a company's bonds are callable,

The issuing company is likely to retire the bonds before maturity if the bonds are paying 8% interest while the market rate of interest is 4%

26. Which of the following is not an advantage of issuing long-term debt?

The risk of becoming bankrupt is reduced.

23. When will bonds sell at discount?

The started rate of interest is less than yield/market rate of interest at the time of issue

5. A repair to an appliance under warranty occurs within the warranty period. What adjustment is made?

Warranty liability is debited