ACCT Final

If Express Jet borrows $100 million on October 1, 2018, for one year at 6% interest, how much interest expense does it record for the year ended December 31, 2018? .

$1.5 million

Sandwich Express incurred the following costs related to its purchase of a bread machine. Cost of the equipment $20,000 Sales tax (8%) 1,600 Shipping 2,200 Installation 1,400 Total costs $25,200 At what amount should Sandwich Express record the bread machine?

$25,200

Equipment originally costing $95,000 has accumulated depreciation of $30,000. If it sells the equipment for $55,000, the company should record: .

A loss of $10,000.

Smith Co. filed suit against Western, Inc., seeking damages for patent infringement. Western's legal counsel believes it is probable that Western will settle the lawsuit for an estimated amount in the range of $75,000 to $175,000, with all amounts in the range considered equally likely. How should Western report this litigation? (LO8-5) .

As a liability for $75,000 with disclosure of the range

The book value of an asset is equal to the:

Asset's cost less accumulated depreciation.

The acid-test ratio is:

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

We normally record a long-term asset at the:

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

Management can estimate the amount of loss that will occur due to litigation against the company. If the likelihood of loss is reasonably possible, a contingent liability should be:

Disclosed but not reported as a liability.

Which of the following statements regarding liabilities is not true?

Liabilities result from future transactions.

Which of the following will maximize net income by minimizing depreciation expense in the first year of the asset's life? .

Long service life, high residual value, and straight-line depreciation.

Current liabilities:

May include contingent liabilities.

Assuming a current ratio of 1.00 and an acid-test ratio of 0.75, how will the purchase of inventory with cash affect each ratio?

No change to the current ratio and decrease the acid-test ratio.

The return on assets is equal to the:

Profit margin times asset turnover.

Which of the following expenditures should be recorded as an expense?

Repairs and maintenance that maintain current benefits.

Research and development costs generated internally:

Should be expensed.

The balance in the Accumulated Depreciation account represents:

The amount charged to depreciation expense since the acquisition of the plant asset.

Which of the following statements is true regarding the amortization of intangible assets?

The expected residual value of most intangible assets is zero.

Which of the following is not deducted from an employee's salary?

Unemployment taxes.

The seller collects sales taxes from the customer at the time of sale and reports the sales taxes as:

Sales tax payable.

We record interest expense on a note payable in the period in which: .

We incur interest