Accounting 202 Final Exam (Quiz Multiple Choice)

If Executive Airways borrows $10 million on April 1, 20X1, for one year at 6% interest, how much interest expense does it record for the year ended December 31, 20X1?

450,000

Accumulated depreciation is:

A contra-asset.

When a customer pays in advance for a product or service, the advance payment received by the company is recorded as:

A debit to an asset and a credit to a liability account.

Equipment originally costing $100,000 has accumulated depreciation of $65,000. If it is sold for $40,000, the company should record: (gain or loss of what)

A gain of $5,000.

Which of the following is properly recorded as an intangible asset?

A purchased patent.

Retained earnings represents:

All net income, less all dividends, since the company began operations.

Depreciation in accounting is the:

Allocation of an asset's cost to an expense over time.

The asset's cost less accumulated depreciation is called:

Book value.

The acid-test ratio is

Cash, current investments, and accounts receivable divided by current liabilities

A long-term asset is recorded as the:

Cost of the asset plus all costs necessary to the asset ready for use.

Which of the following depreciation methods typically results in the highest depreciation expense during the first year of an asset's life?

Double-declining-balance method.

The payment of cash dividends is classified in the statement of cash flows as a(n):

Financing activity.

Which of the following is not included in calculating the acid-test ratio?

Inventory.

The advantages of a corporation compared to a sole proprietorship or partnership include:

Limited liability.

Return on equity is calculated as:

Net income divided by average stockholders' equity.

An exclusive 20-year right to manufacture a product or to use a process is a:

Patent.

Which of the following is not reported as an intangible asset in the balance sheet?

Research and development.

The statement of stockholders' equity:

Summarizes the changes in the balance in each stockholders' equity account over a period of time.

If a company issues par-value stock, the amount credited to common stock will be:

The par value per share times the number of shares issued.

Common shareholders usually have all of the following rights except:

To participate in the day-to-day operations.

The current ratio is:

current assets divided by current liabilities

n most cases, current liabilities are payable within ____ year(s), and long-term liabilities are payable more than ____ year(s) from now.

one; one

A company issues 100,000 shares of $1 par value common stock for $17 per share. To record this transaction, the company would credit Additional Paid-in Capital for:

$1,600,000.

A company issues 100,000 shares of $1 par value common stock for $17 per share. To record this transaction, the company would credit Common Stock for:

$100,000.

A stock dividend occurs when:

A company distributes to shareholders additional shares of its own stock.

When a product or service is delivered to a customer that previously paid in advance, the delivery is recorded as:

A debit to a liability and a credit to a revenue account.

Equipment originally costing $65,000 has accumulated depreciation of $25,000. If the equipment is sold for $30,000, the company should record: (gain or loss of what $)

A loss of $10,000.

On November 1, 20X1, a company signed a $200,000, 12%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 20X2. The company should record the following adjusting entry at December 31, 20X1:

Debit Interest Expense and credit Interest Payable, $4,000.