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14. Engler Company purchases a new delivery truck for $55,000. The sales taxes are $4,000. The logo of the company is painted on the side of the truck for $1,600. The truck license is $160. The truck undergoes safety testing for $290. What does Engler record as the cost of the new truck?

b. $60,890

60. The two ways that a corporation can be classified by ownership are

a. publicly held and privately held.

66. A typical organization chart showing delegation of authority would show

a. stockholders delegating to the board of directors.

24. Accountants do not attempt to measure the change in a plant asset's fair value during ownership because

a. the assets are not held for resale.

68. The chief accounting officer in a corporation is the

a. treasurer.

28. A current liability is a debt that can reasonably be expected to be paid

a. within one year or the operating cycle, whichever is longer.

18. Yocum Company purchased equipment on January 1 at a list price of $120,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $2,400 cash discount. Yocum paid $6,000 sales tax on the equipment, and paid installation charges of $1,760. Prior to installation, Yocum paid $4,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

b. $129,360

64. Which of the following statements reflects the transferability of ownership rights in a corporation?

b. A stockholder may dispose of part or all of his shares.

37. The entry to record the proceeds upon issuing an interest-bearing note is

b. Cash Notes Payable

38. Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1. Givens Brick Company signs a $600,000, 8%, 9-month note. The entry made by Givens Brick Company on January 1 to record the proceeds and issuance of the note is

b. Cash 600,000 Notes Payable 600,000

61. Which of the following would not be true of a privately held corporation?

b. Its shares are regularly traded on the New York Stock Exchange

62. Which of the following is not true of a corporation?

c. The acts of its owners bind the corporation.

22. Depreciation is the process of allocating the cost of a plant asset over its service life in

c. a systematic and rational manner.

30. From a liquidity standpoint, it is more desirable for a company to have current

c. assets exceed current liabilities.

25. Depreciation is a process of

c. cost allocation.

47. Sales taxes collected by a retailer are recorded by

c. crediting Sales Taxes Payable.

34. The entry to record the issuance of an interest-bearing note credits Notes Payable for the note's

c. face value.

29. Liabilities are classified on the balance sheet as current or

c. long-term.

33. In most companies, current liabilities are paid within

c. one year or the operating cycle out of current assets.

1. The cost of a purchased building includes all of the following except

c. remodeling costs.

48. Unearned Rent Revenue is

c. reported as a current liability.

31. The relationship of current assets to current liabilities is used in evaluating a company's

c. short-term debt paying ability

53. Under the corporate form of business organization

c. the corporation's life is stipulated in its charter.

52. The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is

c. the corporation.

11. Land improvements should be depreciated over the useful life of the

d. land improvements.

19. Interest may be included in the acquisition cost of a plant asset

a. during the construction period of a self-constructed asset.

69. The ability of a corporation to obtain capital is

a. enhanced because of limited liability and ease of share transferability.

35. With an interest-bearing note, the amount of assets received upon issuance of the note is generally

a. equal to the note's face value.

41. As interest is recorded on an interest-bearing note, the Interest Expense account is

a. increased; the Notes Payable account is increased.

5. The four subdivisions for plant assets are

a. land, land improvements, buildings, and equipment.

8. Carey Company buys land for $50,000 on 12/31/14. As of 3/31/15, the land has appreciated in value to $50,700. On 12/31/15, the land has an appraised value of $51,800.?

a. $0

39. Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1. Givens Brick Company signs a $600,000, 8%, 9-month note. What is the adjusting entry required if Givens Brick Company prepares financial statements on June 30?

a. Interest Expense 24,000 Interest Payable 24,000

46. The entry to record the payment of an interest-bearing note at maturity after all interest expense has been recognized is

a. Notes Payable Interest Payable Cash

63. Jason Thomas has invested $200,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Thomas stand to lose?

a. Up to his total investment of $200,000.

15. All of the following factors in computing depreciation are estimates except

a. cost.

27. Most companies pay current liabilities

a. out of current assets.

44. On October 1, Steve's Carpet Service borrows $350,000 from First National Bank on a 3-month, $350,000, 8% note. The entry by Steve's Carpet Service to record payment of the note and accrued interest on January 1 is

b. Notes Payable 350,000 Interest Payable 7,000 Cash 357,000

13. A company purchases a remote site building for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and recarpeted and there will also be some plumbing work done. Which of the following statements is true?

b. The cost of the building will include the cost of replacing the roof.

73. Which one of the following is not an ownership right of a stockholder in a corporation?

b. To declare dividends on the common stock

3. Which one of the following items is not considered a part of the cost of a truck purchased for business use?

b. Truck license

75. If a stockholder cannot attend a stockholder's meeting, he may delegate his voting rights by means of

b. a proxy.

45. Interest expense on an interest-bearing note is

b. accrued over the life of the note.

20. The balance in the Accumulated Depreciation account represents the

b. amount to be deducted from the cost of the plant asset to arrive at its fair market value.

6. The cost of land does not include

b. annual property taxes.

56. A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

b. corporation is subject to more federal and state government regulations.

49. Sales taxes collected by the retailer are recorded as a(n)

b. liability.

59. The two ways that a corporation can be classified by purpose are

b. profit and not-for-profit.

54. Stockholders of a corporation directly elect

b. the board of directors.

74. If no-par stock is issued without a stated value, then

b. the entire proceeds are considered to be legal capital

55. The person responsible for maintaining the company's cash position is the

b. treasurer.

67. The officer who is generally responsible for maintaining the cash position of the corporation is the

b. treasurer.

26. The relationship between current liabilities and current assets is

b. useful in evaluating a company's liquidity.

7. Gagner Clinic purchases land for $175,000 cash. The clinic assumes $1,500 in property taxes due on the land. The title and attorney fees totaled $1,000. The clinic has the land graded for $2,200. What amount does Gagner Clinic record as the cost for the land?

c. $179,700

10. Wesley Hospital installs a new parking lot. The paving cost $40,000 and the lights to illuminate the new parking area cost $25,000. Which of the following statements is true with respect to these additions?

c. $65,000 should be debited to the Land account.

72. What is ordinarily the first step in the formation of a corporation?

c. Application for incorporation to the appropriate Secretary of State

21. Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

c. Cash needed to replace the plant asset

58. The concept of an "artificial being" refers to which form of business organization?

c. Corporation

70. Which of the following statements concerning taxation is accurate?

c. Corporations pay federal and state income taxes

50. On September 1, Joe's Painting Service borrows $150,000 from National Bank on a 4-month, $150,000, 6% note. What entry must Joe's Painting Service make on December 31 before financial statements are prepared?

c. Interest Expense 3,000 Interest Payable 3,000

40. Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1. Givens Brick Company signs a $600,000, 8%, 9-month note. What entry will Givens Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

c. Interest Expense 36,000 Notes Payable 600,000 Cash 636,000

43. On October 1, Steve's Carpet Service borrows $350,000 from First National Bank on a 3-month, $350,000, 8% note. What entry must Steve's Carpet Service make on December 31 before financial statements are prepared?

c. Interest Expense 7,000 Interest Payable 7,000

12. Mattox Company is building a new plant that will take three years to construct. The construction will be financed in part by funds borrowed during the construction period. There are significant architect fees, excavation fees, and building permit fees. Which of the following statements is true?

c. Interest is capitalized during the construction as part of the cost of the building.

4. Which of the following assets does not decline in service potential over the course of its useful life?

c. Land

71. Which of the following statements is not considered a disadvantage of the corporate form of organization?

c. Limited liability of stockholders

2. A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at

d. $102,000.

17. Angie's Blooms purchased a delivery van for $40,000. The company was given a $4,000 cash discount by the dealer, and paid $2,000 sales tax. Annual insurance on the van is $1,000. As a result of the purchase, by how much will Angie's Blooms increase its van account?

d. $38,000

16. Presto Company purchased equipment and these costs were incurred: Cash price $65,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing 860 Total costs $70,100 Presto will record the acquisition cost of the equipment as

d. $70,100.

9. Hull Company acquires land for $86,000 cash. Additional costs are as follows: Removal of shed $ 300 Filling and grading 1,500 Salvage value of lumber of shed 120 Broker commission 1,130 Paving of parking lot 10,000 Closing costs 560 Hull will record the acquisition cost of the land as

d. $89,370.

51. Which one of the following is a privately held corporation?

d. Cargill Inc.

57. Which one of the following would not be considered an advantage of the corporate form of organization?

d. Government regulation

32. Which of the following is usually not an accrued liability?

d. Notes payable

36. A note payable is in the form of

d. a standing agreement.

23. The book value of an asset is equal to the

d. asset's cost less accumulated depreciation.

76. If a corporation has only one class of stock, it is referred to as

d. common stock

65. A corporate board of directors does not generally

d. execute policy.