ACC- Chapters 8,9,10

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​$211,530

A coal mine cost​ $1,000,000 and is estimated to hold​ 52,000 tons of coal. There is no residual value. During the first year of​ operations, 11,000 tons are extracted and sold. Calculate depletion expense for the first year.​ (Round any intermediate calculations to the nearest​ cent.)

False

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

a loss of​ $5,000

A photocopier cost​ $95,000 when new and has accumulated depreciation of​ $90,000. If the business discards this plant​ asset, the result is​ ________.

True

A receiving report should be matched with the supplier invoice before a payment to the supplier is approved.

Electronic Data Interchange

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as​ ________.

False

A trademark should not be amortized over its useful life.

True

According to Generally Accepted Accounting​ Principles, if the fair value of goodwill decreases below its book​ value, an impairment loss must be recorded.

False

Accounts Receivable are generally reported at the gross amount on the balance sheet.

True

Accounts receivable are also known as trade receivables.

True

An asset is considered to be obsolete when a newer asset can perform the job more efficiently.

when a newer asset can perform the job more efficiently than the old asset can

An asset is considered to be obsolete​ ________.

True

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account. Cash plus petty cash tickets total the amount allocated to the petty cash fund.

False

As long as the same person deposits customer checks and records the deposits into the​ journal, there will be good internal control over cash receipts.

True

A​ business, which has a calendar year accounting​ period, purchased an asset on March​ 1, 2016. The business disposed of the asset on August​ 31, 2017. For the calendar year​ 2017, depreciation should be calculated from January 1 to August 31.

True

A​ point-of-sale terminal provides control over cash receipts over the counter.

True

Businesses are required to use Modified Accelerated Cost Recovery System​ (MACRS) for tax purposes.

​competent, reliable, and ethical personnel

Cadmia Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. The clerk has not yet been adequately trained on the maintenance needs of the equipment. In the above​ situation, which internal control procedure needs​ strengthening?

​$1,350

Calculate the interest on a​ 90-day, 12% note for​ $45,000. (Use a​ 360-day year to compute interest. Round your answer to the nearest​ dollar.)

False

Capitalizing a cost involves crediting the asset account.

total current liabilities

Cash and cash equivalents are divided by​ ________ to determine the cash ratio.

True

Discarding plant assets involves disposing of the asset for no cash.

True

Dividends​ receivable, interest​ receivable, and taxes receivable are generally categorized as other receivables.

True

External auditors evaluate company controls to ensure the financial statements are presented​ fairly, in accordance with Generally Accepted Accounting Principles.

True

For strong controls over cash​ receipts, the checks to be deposited should be sent to the​ treasurer, and the remittance advices should be sent to the accounting department.

the write off has no effect on net income

Grabbe Enterprises uses the allowance method to account for uncollectible receivables. When an uncollectible account is written​ off, ________.

False

If an asset is disposed of during the​ year, there is no need to calculate depreciation from the beginning of the year of disposal to the date of disposal.

True

In a bank​ reconciliation, a NSF check will be shown on the book side of the reconciliation.

False

Interest is generally stated as a monthly rate.

True

Internal auditors are employees of the business who ensure that employees are following company policies and that operations are running efficiently.

​$252,083

On August​ 14, First Avenue Bank lent​ $250,000 to City Cafe on a 75​ day, 4% note. What is the maturity value of the​ note? ​ (Use a​ 360-day year and round answers to the nearest​ dollar.)

Oct. 28

On August​ 14, Main Street Bank lent​ $300,000 to City Cafe on a 75​ day, 5% note. What is the maturity date of the​ note?

​$1,210

On December​ 1, 2017,​ Falcon, Inc. sold machinery to a customer for​ $22,000. The customer could not pay at the time of sale but agreed to pay 6 months later and signed a​ 6-month note at​ 11% interest. How much interest revenue was earned for the entire term of the​ note? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

​$204,800

On January​ 1, 2017,​ Anodel, Inc. acquired a machine for​ $1,080,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be​ $56,000. Calculate the depreciation expense per year using the​ straight-line method.

​$32,000

On January​ 1, A Plus Services has the following​ balances: Accounts Receivable​ $28,000 (debit) Bad Debts Expense ​ $0 A Plus Services has the following transactions during​ January: Credit sales of​ $110,000, collections of credit sales of​ $87,000, and​ write-offs of​ $19,000. A Plus Services uses the direct​ write-off method. At the end of​ January, the balance of Accounts Receivable is​ ________.

​$524,333

On July​ 7, Landview Bank lent​ $520,000 to Classical Music Shop on a 60​ day, 5% note. What is the maturity value of the​ note? (Use a​ 360-day year and round answers to the nearest​ dollar.)

​$117,700

On October​ 1, 2017,​ Parkin, Inc. made a loan to one of its customers. The customer signed a​ 6-month note for​ $110,000 at​ 14%. Calculate the maturity value of the note.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

​$500

On October​ 1, 2017,​ Parsons, Inc. sold machinery to a customer for​ $20,000. The customer could not pay at the time of​ sale, but agreed to pay 10 months​ later, and signed an​ 10-month note at​ 10% interest. How much interest revenue was earned during​ 2017? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

True

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

promoting operational efficiency

Reducing expenses to increase operating profit is representative of​ ________.

False

Residual value is also known as depreciable cost.

​$234,150

Steel Rolling Corp. purchased a​ mine, which holds an estimated​ 39,000 tons of iron​ ore, on January​ 1, 2017, for​ $522,000. The mine is expected to have zero residual value. The business extracted and sold​ 17,500 tons of ore in 2017 and​ 15,800 tons of ore in 2018. What is the depletion expense for​ 2017? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

False

The accounts receivable turnover ratio indicates whether a company could pay all its current liabilities if they were to become due immediately.

Pioneer Corp.

The cash ratios of four companies are listed below. Company Cash Ratio Juan Corp. 0.23 ​Rose, Inc. 0.14 ​Freelance, Inc. 0.20 Pioneer Corp. 0.28 Which company has the maximum ability to repay its current​ liabilities?

False

The collection period of accounts receivable is usually​ long: therefore, it is classified as a​ long-term asset on the balance sheet.

False

The difference that arises between the balance on the bank statement and the balance on the​ company's books because of a time lag in recording transactions is known as a permanent difference.

maker of the note

The entity that signs the promissory note and promises to pay the required amount is the​ ________.

True

The environment is the culture of a​ business, and it starts with the CEO or CFO and the top managers.

the allowance method and the direct​ write-off method

The two methods of accounting for uncollectible receivables are​ ________.

True

The​ aging-of-receivables method is a balance sheet approach of estimating uncollectible accounts.

False

The​ percent-of-sales method calculates bad debts expense based on a percentage of net cash sales.

False

The​ percent-of-sales method, used to compute bad debt​ expense, is also known as the balance sheet approach.

a debit to Bad Debts Expense account

Under the direct​ write-off method, the entry to write off an uncollectible account will include​ ________.

​$51,625

What is the maturity value of a​ 3-month, 13% note for​ $50,000? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

credit to Accounts Receivable and a debit to Bad Debts Expense

When a company is using the direct​ write-off method, and an account is written​ off, the journal entry consists of a​ ________.

the amount of bad debts expense is estimated at the end of the accounting period

When a company uses the allowance method to measure bad​ debts, ________.

False

When a plant asset is sold for less than its book​ value, a gain is recorded.

reduces the amount of the Allowance for Bad Debts account

When using the allowance​ method, the​ write-off of a receivable​ ________.

It is used in the operations of a business.

Which of the following is a characteristic of a plant​ asset, such as a​ building?

The store clerk deposits the cash in the bank.

Which of the following is not an appropriate internal control for cash receipts over the​ counter?

attaching electronic sensors to merchandise inventory

Which of the following is representative of safeguarding​ assets?

It is shown as a contra account related to accounts receivable.

Which of the following is true of the balance sheet presentation of the Allowance for Bad​ Debts?

the purchase order

Which of the following items must be examined by the controller or treasurer before signing a​ check?

It is an order to purchase goods from a supplier.

Which of the following statements describes a purchase​ order?

Depreciation is recorded on all plant assets.

Which of the following statements is​ incorrect?

It shows each authorized​ person's signature for a bank account.

Which one of the following is true of a signature​ card?

Bad Debts Expense Dr-125 Accounts Receivable Cr-125

​Charms, Inc. has determined that an account receivable of​ $125 is uncollectible. The company uses the direct​ write-off method. Which of the following entries is required to record the​ write-off?

​$731,600

​Ivorycoast, Inc. purchased a van on January​ 1, 2017, for​ $890,000. Estimated life of the van was five​ years, and its estimated residual value was​ $98,000. Ivorycoast uses the​ straight-line method of depreciation. Calculate the book value of the van at the end of 2017.


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