ACC 131 Exam 3

Refer to Fabian Woodworks. If the company uses the units of production method, what is the depreciation rate per hour for the equipment

$0.10

If the company uses the LIFO inventory costing methods, ending inventory at June 30th is:

$1,811.75

If the company uses the LIFO inventory costing method, cost of goods sold for June 5 is:

$1,820.00

If the company uses the FIFO inventory cost methods, the amount of ending inventory reported on the balance sheet is:

$1,823.75

Which of the following is a tax paid on wages by the employers but not the employee?

Federal unemployment tax

A contingent liability is recorded as a journal entry in the accounts records

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

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 there maturity

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

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

The risk of becoming bankrupt is reduced

When will bonds sell at discount?

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

The book value of an asset is defined as

Cost less accumulated depreciation

If the company uses the FIFO inventory cost methods, cost of goods sold for the month of June is

$2,538.00

If the company uses the LIFO inventory costing method, cost of goods sold for June 24 is:

$730.00

Refer to Fabian Woodworks. If the company uses the units of production method, what is the depreciation expense recorded in 2013

2,600

The matching principle explains why

All of the above

Inventory cost methods are designed to

Allocate the cost of goods available for sale between ending inventory and cost of goods sold

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

Amortization

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

Contingent liabilities

Computing magazine receives $90 in advance from a customer for a 3-year subscription. Computing Magazines entry to record the receipt of funds would include a:

Credit to unearned subscription revenue for $90

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

Accrued interest on a short term note payable is recorded by

Debiting interest expense and crediting interest payable

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

Effective Rate

Which of the following is irrelevant in computing a machines depreciation expense using the units of production method?

Estimated useful life in years

A revenue expenditure usually results in a debit to

Expense account

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

Expense in the period incurred

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 interest is paid. (numbers omitted)

Interest expense Discount on bonds payable

When purchasing prices are rising, which of the following statements is true?

LIFO produces a higher cost of goods sold than FIFO

Which of the following assets is not subject to depreciation, depletion, or amortization?

Land

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

Matching

The depreciable cost of an asset is

Original cost minus residual value

Which of the following cost related to the purchase of production equipment would be considered a revenue expenditure?

Repair and maintenance cost during the equipment's first year of service

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

Salaries Payable

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

State income tax

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

The asset is sold for a pirce greater than the assets book value

Depreciation is a process by which

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

If a company 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%

A repair to an appliance under warranty occurs within the warranty periods. What adjustments is made?

Warranty liability is debited

Long term debt generally includes

obligations that extend beyond one year