Accounting Exam 3

Carey company buys land for $50,000 on 12/32/12. As of 3/31/13, the land has appreciated in value to $50,700. On 12/31/13, the land has an appraised value of $51,800. By what amount should the land account be increased in 2013?

$0

Geiss motorsports sold 50 motorbikes for $1,000 each. The bikes carry a 2-year warranty for repairs. Estimates indicate that repairs costs will average 2% of the total selling price. What is the amount that would be recorded in the estimated warranty liability account as a result of selling the bikes?

$1,000

On Jan. 1, a machine with a useful life of 5 years & a residual value of $25,000 was purchased for $75,000. What is the depreciation expense for year 2 under double-declining -balance method of depreciation?

$18,000

GTO division has $14,000 as current assets, $2,000 in accounts payable & $2,000 in unearned sales revenue. What is the division's current ratio?

3.50

A company purchased office equipment for $40,000 & estimated a salvage value of $8,000 at the end of its 4 year useful life. The constant percent to be applied against book value each year if the double-declining-balance method that is used is:

50%

What would appear on the balance sheet as a current liability?

A probable loss in the amount of $4 mil from a pending lawsuit

on the balance sheet, the cumulative amount of plant & equipment already expensed is reported in an account called ___________

Accumulated Depreciation

The cost of a purchased building includes all of the following EXCEPT: -closing costs -real estates broker's commission -remodeling costs

All of these are included

The cost of goods sold is equal to

Cost of goods available for sale - ending inventory

What of the following is an intangible asset? -oil -goodwill -retained earnings -accounts receivable

Goodwill

operating assets with no physical properties are called _________

Intangible Assets

All of the following are acceptable for financial accounting purposes EXCEPT: -Specific ID -LIFO -FIFO -Retail cost

Retail Cost

Cost allocation of intangible asset is referred to as __________

amortization

In computing depreciation salvage value ( residual value) is ____________________

an estimate of a plant asset's value at the end of it's useful life

For which type of merchandise use the specific ID method of inventory costing?

boats

If contingent liabilities are probable & estimable, then they must be recorded even before the outcome of the future event. True or False?

true

The cost of plants and equipment is allocated to expense over the time periods which benefits from the use of the asset. This process is called _______________

Depreciation

which inventory costing method results in the highest inventory balance during a period of rising purchase prices?

FIFO

The inventory turnover ratio is defined as cost of goods sold divided by average inventory. True or False?

True

With the perpetual inventory system, the inventory account is updated after each sale or purchase? True or False?

True

The payment of Accounts Payable results in a(n) _________

decrease in both liabilities & assets

On Oct. 1st, a company borrowed $60,000 from Eighth National Bank on a 1-year, 7% note. If the company's fiscal year ends on Dec 31st, a year-end adjusting entry is required to increase:

interest payable by $1,050

Coffski, Inc. sold merchandise to customer on credit. the invoice date was June 10th; credit terms were 1/10,n/30. What should the customer pay?

$1,000 if invoice is paid July 9th

A company purchases factory equipment on Jan. 1, 2013 for $80,000 it is estimated that the equipment will have $10,000 salvage value at the end of its 10 year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at Dec 31, 2013 is ____________

$7,000

A machine with a cost of $240,00 has an estimated salvage value of $15,000 & an estimated useful life of 5 years or 15,000 hours. It is to be depreciated using the units-of-activity method of depreciation. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

$75,000

June 1- On hand, 50 units at $18 each June 4- Purchased 115 units at $18.20 June 5- Sold 100 units June 10- Purchased 75 units @ $18.25 each June 24- Sold 40 units If Klump uses the FIFO investing costing method: 1. The amount of the ending inventory reported on the balance is; 2. Cost of goods sold for the month of June is: Ending Inventory 25@ $18.20 = 455.00 75@ $18.25 = 1368.75 =1,823.75 Cost of goods sold 50 @ $18.00 = 900 50 @ $18.20 = 910 40 @ $18.20 = 728 = 2,538.00

Ending Inventory 25@ $18.20 = 455.00 75@ $18.25 = 1368.75 =1,823.75 Cost of goods sold 50 @ $18.00 = 900 50 @ $18.20 = 910 40 @ $18.20 = 728 = 2,538.00

Which types of inventory accounts would be used by a wholesaler or retailer?

merchandise inventory

A customer returned damaged goods for credit. Under a perpetual system which of the seller's accounts decreases?

purchase returns

A manufacturing company's weekly payroll is $80,000 for a 5-day work week beginning each Monday & ending each Friday. The last time salaries and wages were recorded was Friday, Dec. 26. What adjustment is needed on Dec 31, the last day of the company's fiscal period?

increases wages expense by $48,000

A landlord records the collection of tenants security deposit as a(n) _______

liability

When market value of inventory items have declined below their cost, which method would be most appropriate in complying with GAAP?

lower of cost or market

The book value of an asset is equal to the

asset's cost (minus) accumulated depreciation

The method most commonly used to compute depletion is the _______________

units-of-activity method

A current liability is defined as a commitment or obligation which requires a transfer assets, create a new current liability, or provide services to another entity at some point in the future that must occur ____________________

within one year or the operating cycle

Mar 1 - On hand, 10 units @ $2 each $20 Mar 4 - Sold 8 units for $10 each $80 Mar 22 - Purchased 50 units @ $4 each $200 Mar 26 - sold 48 units for $10 each $480 If Lowery uses the LIFO investing costing method, how much is cost of goods sold for the month of march?

$208

Which items it not a consideration when recording periodic depreciation expense on plant assets?

-Salvage value -Cost -Estimated useful life