Accounting Quizzes
depreciation is the process by which
the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset
Using different depreciation methods for book purposes versus tax purposes for the same asset is
the direct result of differing goals of financial and tax accounting
Stockholders prefer to invest in preferred stock because
the dividends are paid on preferred stock before they are paid on common stock
If a company issues $5 par value common stock
$5 per share is presented in the common stock account on the balance sheet.
Which of the following items is considered a cash equivalent if held at the balance sheet date
US Treasury bill purchased when there were 90 days until maturity
Which of the following is not classified as a long-term liability
current portion of long-term debt
the effect of recording depreciation for the year is a(n)
decrease in asset and decrease in Net Income
Tropical Co. declared a cash dividend of $30,000. This transaction includes a(n)
decrease to RE of $30,000
Which balance sheet account are most affected by investing activities
long-term assets
Which of the following would appear on the balance sheet as a current liability
premium offers in cereal boxes
Which of the following is an investing activity
purchase of investment items for cash, purchase of equipment for cash,and sale of land for cash
The three forms of business entities are
sole proprietorships, partnerships, corporations
The primary purpose of the statement of cash flows is to provide information about
the cash in/outflows of the company
Which of the following set of the factors is needed to calculated depreciation on plant and equipment
the estimated life of the asset, its acquisition cost, and its estimated residual value
which of the following below is an example of capital expenditure
replacing an engine in a company car
Which of the following should be classified as an investing activity on the statement of cash flows
sale of a warehouse
Bing's export company Co. purchased a new delivery truck at the beginning of 2015. The truck has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2015. The truck was driven 20,000 miles during 2015 and 24,000 miles during 2016. The number of expected miles over five years is 100,000. What is the amount by which double-declining exceeds straight-line depreciation over the 5-year life of the truck?
$0
On January 2, 2018, Roof Mast Construction , Inc. issued $520,000, 10-year bonds $574,540. The bonds pay interest on June 30 and December 31. The face rate is 8% and the market rate is 6%. At the maturity date, besides an interest payment, Roof Master would repay the bondholders
$520,000
Bonds in the amount of $100,000 and a life of 10 years were issued by the Focus Company. If the face rate is 6% and the interest is paid semiannually, what would be the total amount of interest paid over the life of the bonds?
$60,000
Which of the following statements is true with respect to long-term liabilities
Long-term liabilities include bonds, other long-term liabilities and deferred income taxes
Which balance sheet account are most affected by operating activities
current assets and liabilities
The current portion of long-term debt is a balance sheet item for Flavor Products Company. How How would it most likely be classified on the balance sheet?
current liability
The Retained Earnings account balance for a corporation is $10,000,000 This amount represents
earnings that have not been distributed to shareholders
Operating asset with no physical properties are called
intangible assets
Which of the following accounts is classified as a long-term liability
note payable, due in 3 years
Land is not depreciated
will provide future benefits for a company for an unlimited period of time
Royal Company purchased a dump at the beginning of 2012 at a cost of $60,000. The truck had an estimated life of 6 years and estimated residual value of $24,000. On January 1, 2014, the company made major repairs of $20,000 to the truck that extended the life 1 year. Thus, starting with 2014, the truck has a remaining life of 5 years and a new salvage value of $8,000. Royal uses the straight-line depreciation method. What amount should be recorded as depreciation expense each year starting in 2014?
$12,000
A liability for dividends is created
at the date of declaration
If a company purchases $3,00 worth of inventory with terms of 1/15, n30 and pays within 15 days, then the amount paid to the seller would be
$2,970
Paxman company purchases a patent for $170,000 at the beginning of 2018 and an estimated that its expected useful life was 10 years. The patent has a legal life of 17 years. What amount should be recorded as amortization expense for the patent in 2018
$10,000
If current assets amount to $150, total assets $350, current liabilities $65, and total liabilities $100 then working capital is
$85
Carrington, Inc. recorded $97,000 in salaries expense for January, 2019. Its beginning balance in salaries payable was $3,000 and its ending balance was $4,000. How much was paid in cash for salaries during January, 2019
$97,000
Winslow Corporation reported the following in stockholder's equity section of its balance sheet at December 31, 2015 CS, $1 stated value---$10,000 APIC (CS)--- 40,000 RE---25,000 Total contribute capital and retained earnings---$75,000 Less: Treasury Stock (at cost $20 per share)---(2,000) Total stockholder's equity---$73,000 How many shares of stock are issued
10,000
If current assets amount to $62,000, total assets $350,000, current liabilities $31,000, and total liabilities $125,000, then the current ratio is
2.0 to 1
Vegas Finance Company reported the following: CS, $10 par 100,000 shares authorized, 80,000 shares issued and outstanding What is the effect of issuing 1,000 shares of common stock at $15 per share
APIC increases $5,000
Which of the following statements regarding contingencies it true
They are probable and not estimable are disclosed in the notes to the financial statements
Valor Company issued 5,000 shares of $1 par common stock for $30 preacher, providing the company with $150,000 in cash. What effect, in addition to the increase in cash, does this transaction have in the account?
Common Stock increases $5,000; APIC-CS increases $145,000
Which of the following is a financing activity
Issuing bonds for cash, purchasing a company's stock (treasury stock) for cash, making a cash payment to repay a loan
On January 2, 2013 Hannah Company sold a machine for $1,000 that it had used for several years. The machine costs $12,000 and had accumulated depreciation of $9,000 at the time of sale. What gain or loss will be reported on the income statement for the sale of machine?
Loss of $2,000
Borden Company incurred the following costs to acquire and prepare land for a new parking lot: purchase price for land, cost to clear land, cost of paving, lighting for the parking lot, and landscaping for the working lot. How should the company determine which costs should be recorded as Land?
The cost with an unlimited life will increase Land, and the cost with limited useful life will increase Land Improvements
Boston Trombley Company is a defendant in a lawsuit alleging damages of $3 billion. It is possible the Boston Trombley will loose the suit. The litigation is anticipated to continue for several year,but no reasonable estimate can be made at this time regarding ultimate financial responsibility. This situation is an example of
a loss contingency that should be disclosed in the notes to Boston's financial statements
Bonds are a popular source of financing because
bond intrest is deducible for tax purposes, while dividends paid on stock are not
Which of the following is an operating activity
cash collections from credit customers, cash payments for operating expenses, and cash payments
A company would repurchase its own stock for all of the following reasons except:
it wishes to make an investment in its own stock
When bond are issuing by a company, the accounting entry shows
increase assets and an increase in liabilities
On May 1, the Chris Company borrow $30,000 from the Third Street Bank on a 1-year 6% note. If the company keep its record on a calendar year, an adjustment is needed on December 31 to increase
intrest payable, $1,200