MGT 11a Midterm 2 questions

A) debit 84.73

Given the following information: --petty cash balance $450 --postage receipt $48 --business meal receipt $102.34 --courier receipt: $82.50 --office supplies receipt: $56.22 --cash on hand at the end of the month: $76.21 What is the amount of cash over and short? A) debit 84.73 B) credit 84.73 C) debit 160.94 D) credit 160.94 E) no cash over and short will be recorded

C) factor

The buyer who pays cash for an account receivable is referred to as a: A) payor B) pledgor C) factor D) payee E) pledgee

B) total compensation earned by an employee before any deductions

gross pay is: A) take-home pay B) total compensation earned by an employee before any deductions C) salaries after taxes are deducted D) deduction withheld by an employer E) the amount of the paycheck

C) land 81,500; land improvements 32,600; building 489oo

A company paid $150,000 + a 6% and $4,000 in closing costs for the property. The property included land appraised at $87,500, land improvements appraised at $35,000, and a building appraised at $52,000. What should the allocation of the property's costs in the company's accounting records? A) land 75,000; land improvements 30,000; building 45,ooo B) land 75,000; land improvements 30,800; building 46,2oo C) land 81,500; land improvements 32,600; building 489oo D) land 79500; land improvements 32600; building 47700 E) land 87500; land improvements 35,000; building 52500

C) 864

A company purchased a POS cash register on Jan 1. for $5400. The register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining balance method? A) 500 b) 800 C) 864 D) 1000 E) 1080

E) 9749.72

A company receives a 6.2%, 60-day note for $9650. The total amount of cash due on the maturity date is: A) 598.30 B) 99.72 C) 9650 D) 10248.3 E) 9749.72

E) 333.75

A company receives a 7.5%, 6-month note for $8900. The total interest due on the maturity date is: A) 66,750 B) 4,005 C) 2,002.50 D) 667.50 E) 333.75

C) recognize warranty expense and liability in the year of the sale

A company sold $12,000 worth of trampolines with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should: ** A) consider the warranty expense a remote liability since the rate is only 2% B) recognize warranty expense at the time the warranty work is performed C) recognize warranty expense and liability in the year of the sale D) consider the warranty expense a contingent liability E) recognize warranty liability when the company purchases the trampolines

D) 1600

A company used straight-line depreciation for an item of equipment that cost $12,000; had a salvage value of $2,000; and had a 5 year useful life. After depreciation the asset for 3 complete years, the salvage value was reduced to $1200 and its total useful life was increased from 5 years to 6 years. Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life: A) 1,000 B) 1800 C) 1467 D) 1600 E) 2160

a) deduct the check from the bank statement balance

A company wrote a check on Sept. 30 that did not appear on the bank statement dated Sept. 30. In preparing the Sept. 30 bank reconciliation, the company should: a) deduct the check from the bank statement balance b) send the bank a credit memorandum c) deduct the check from the sept. 30 book balance and add it to the Oct. 1 book balance d) add the check to the book balance of cash e) add the check to the bank statement balance

E) not included as a reconciling item

A deposit in transit on last period's bank reconciliation is shown as a deposit on the bank statement this period. As a result, in preparing this periods reconciliation, the amount of this deposit should be: A) added to the book balance of cash B) deducted from the book balance of cash C) added to the bank balance of cash D) deducted from the bank balance of cash E) not included as a reconciling item

A) 5.2 years

A depreciable asset currently has a $40,100 book value. The company owning the asset uses straight-line depreciation. They paid $70,000 for this asset and consider it to have a $1,000 salvage value with a 12-year useful life. How long has the company owned this asset? A) 5.2 years B) 7 years C) 10.2 years D) 12 years E) cannot be determined from info given

B) Declining- balance depreciation

A depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate each period to the asset's beginning book value is called: A) Book value depreciation B) Declining-balance depreciation C) Straight-line depreciation D) Units-of-production depreciation

C) 7 years

A machine originally had an estimated useful life of 5 years, but after 3 complete years it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining: A) 2 years B) 5 years C) 7 years D) 8 years E) 10 years

C) Is a note receivable for the recipient

A promissory note received from a customer in exchange for an account receivable: A) Is a cash equivalent for the recipient B) Is an account receivable for the recipient C) Is a note receivable for the recipient D) Is a short-term investment for the recipient E) Is a note payable for the recipient

C) debit cash, credit unearned revenues

Advance ticket sales totaling $6,000,000 cash would be recognized as follows: A) debit sales, credit unearned revenues B) debit unearned revenues, credit sales C) debit cash, credit unearned revenues D) debit unearned revenues, credit cash e) debit cash, credit revenue payable

C) Are liabilities

Amounts received in advance from customers for future products or services: A) Are revenues B) Increase income C) Are liabilities D) Are not allowed under GAAP E) Require an outlay of cash in the future

B) bank reconciliation

An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n): A) internal audit B) bank reconciliation C) bank audit D) trial reconciliation E) analysis of debits and credits

D) credit to cash for $387.50

Assume that the custodian of a $450 petty cash fund has $62.50 n coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the cash fund will include a: ** A) debit to cash for $377.50 B) credit to cash over short for $5 C) debit to petty cash for $382.50 D) credit to cash for $387.50 E) debit to cash for $387.50

B) debit cash 1245 debit cash over short 5 credit sales 1250

At the end of the day, the cash register's record shows $1250, but the count of cash in the cash register is $1245. The correct entry to record the cash sales for the day is: A) Debit cash 1245 Credit sales 1245 B) debit cash 1245 debit cash over short 5 credit sales 1250 C) Debit Cash 1250 Credit Sales 1250 D) Debit cash 1250 credit sales 1245 credit cash over short 5 E) Debit cash over short 5 credit sales 5

A) produce the same total depreciation over an assets life

Both the straight-line depreciation method and the double-declining-balance depreciation method: A) produce the same total depreciation over an assets life B) produce the same depreciation expense each year C) produce the same book value each year D) are acceptable for tax purposes only E) are the only acceptable methods of depreciation for financial reporting

C) 2533.33

Cardco Inc. has an annual accounting period that ends on Dec. 31. During the current year a depreciable asset that cost $42,000 was purchased on Sept. 2. The asset has a $4000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a five year life. What is the total depreciation expense for the current year? A) 1900 B) 7600 C) 2533.33 D) 2800 E) 3166.67

A) $4949

Connor Company borrows $185,600 cash on Nov. 1 2013 by singing a 120-day, 8% note. What is the total amount of interest that Conner will recognize for this note? A) $4949 B) $14848 C) $2467 D) $0, no interest expense is recognized E) $1485

c) is the process of allocating to expense the cost of a plant asset

Depreciation: ** a) measures the decline in market value of an asset b) measures physical deterioration of an asset c) is the process of allocating to expense the cost of a plant asset d) is an outflow of cash from the use of a plant asset e) is applied to land

A) Social Security taxes

FICA taxes include: A) Social Security taxes B) Charitable giving C) Employee income taxes D) Unemployment taxes E) Federal taxes

E) to notify a depositor of a deposit to their account

For which item does a bank NOT issue a debit memorandum? A) to notify a depositor of all withdrawals through an ATM B) to notify a depositor of a deduction to a depositor's account C) to notify a depositor of a bounced check D) to notify a depositor of periodic payments arranged in advance, by a depositor E) to notify a depositor of a deposit to their account

A) deduct $3600 from the book balance of cash

In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 4239 for Nov. rent was correctly written and drawn for $7390, but was erroneously entered in the accounting records as $3790. When reconciling the Nov. bank statement, the company should: A) deduct $3600 from the book balance of cash b) add $3600 to the bank statement balance C) add $7390 to the book balance of cash D) deduct $3600 from the bank statement balance E) add $3600 to the book balance of cash

D) should be recorded if payment for damages is probable and the amount can be reasonably estimated

In the accounting records of a defendant, lawsuits: A) are estimated liabilities B) should always be recorded C) should always be disclosed D) should be recorded if payment for damages is probable and the amount can be reasonably estimated E) should never be recorded

B) $25

On Dec. 1 Martin Company signed a %5000, 3-mont, 6% note payable, with the principle plus interest due on March 1 of the following year. What amount of interest expense is accrued at Dec. 31 on the note? A) $0 B) $25 C) $50 D) %75 E) 300

B) 3551.6

On Dec. 31 of the current year, a company's unadjusted trial balance included the following: accounts receivable, debit balance of $88,790; allowance for doubtful accounts, credit balance of $1245. What amount should be debited to Bad Debts Expense, assuming 4% of outstanding accounts receivable at the end of the current year are considered uncollectible?** A) 1245 B) 3551.6 C) 4796.6 D) 2306.6 E) 87545

B) no effect in net income; not effect on total assets

On Oct. 29 of the current year, a company concluded that a customer's $4,400 account receivable was uncollectible and that the account should be written off. What effect will this write-off have on this company's net income and total assets assuming the allowance method is used to account for the bad debt? A) decrease in net income; not effect on total assets B) no effect in net income; not effect on total assets C) decrease in net income; decrease in total assets D) increase in net income; not effect on total assets E) no effect in net income; decrease in total assets

B) It may be revised based on new information

Once the estimated depreciation expense for an asset is calculated: A) it cannot be changed due to the historical cost principle B) it may be revised based on new information C) Any changes are accumulated and recognized when the asset is sold

A) tangible assets used in the operation of a business that have a useful life of more than one accounting period

Plant assets are: A) tangible assets used in the operation of a business that have a useful life of more than one accounting period B) current assets C) held for sale D) intangible assets used in the operation of a business that have a useful life of more than one accounting period E) tangible assets used in the operation of a business that have a useful life of less than one accounting period

D) $27,900

Temper Company has credit sales of $3.1 million for year 2013. Temper estimates that .9% of the credit sales will not be collected. ON Dec. 31, 2013, the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $2,222. Assuming the company uses the percent of sales method, what is the amount that Temper will enter as the Bad Debt Expense in the Dec. 31 adjusting journal entry? A) $25,246.4 B) $27,468.44 C) $23.024.4 D) $27,900 E) $24,420.4

D) 6080

The amount due on the date of maturity for a $6,000, 60-day, 8% note receivable is: A) 6,000 B) 6480 C) 5520 D) 6080 E) 5920

A) Interest

The difference between the amount received from issuing a note payable and the amount repaid is referred to as: A) Interest B) Principle C) Face value D) Cash E) Accounts payable

A) Purchase requisition

The internal document prepared by a department manager that informs the purchasing department of its needs is the: ** A) Purchase requisition B) Purchase order C) Invoice D) Receiving report E) Invoice approval

C) Is the day the note is due to be paid

The maturity date of a note receivable: A) Is the day of the credit sale B) Is the day the note was signed C) Is the day the note is due to be paid D) is the date of the first payment E) is the last day of the month

C) 37.56

Triple Company's accountant made an entry that included the following items: debit postage expense$12.42; debit office supplies expense $27.33; credit cash over short $2.19; if the original amount in petty cash is $320, how much was the credit to cash for the reimbursement? ** A) 320 B) 202.44 C) 37.56 D) 39.75 E) 41.94

A) Are not contingent liabilities because they are future events not arising out of past transactions or events

Uncertainties such as natural disasters that could happen in the future: A) Are not contingent liabilities because they are future events not arising out of past transactions or events B) Are contingent liabilities because they are future events arising from past transactions or events C) Should be disclosed because of their usefulness to financial statements D) Are estimated liabilities because the amounts are uncertain E) Arise out of transactions such as debt guarantees

b) paid in full

When the maker of a note honors a note this indicates that the note is: a) signed b) paid in full c) guaranteed d) notarized e) cosigned

B) 38621.2

Your company began operations on Jan 1 2013. During the first year, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows: --sold $1,348,300 of merchandise (that had cost $983,600) on credit, terms n/30 --wrote off $19,400 of uncollectible accounts receivable --received $666,100 cash in payment of accounts receivable --in adjusting the accounts on Dec. 31, the company estimated that 2.9% of accounts receivable will be uncollectible What is the amount required for the adjusting journal entry to record bad debt expense? ** A) 18644.9 B) 38621.2 C) 19783.8 D) 19221.2 E) 19400.2

B) 26,160

a company purchased a rope-braiding machine for $190,000. the machine has a useful life of 8 years and a residual value of $10,000. it is estimated that the machine could produce 750,000 units of climbing rope over its useful life. In the first year, 105,000 units were produced. In the second year, production increased to 109,000. Using the units-of-production method, what was the amount of depreciation after the second year? A) 25,200 B) 26,160 C) 26,660 D)27,613 E)53160

B) a potential obligation that depends on a future event arising out of a past transaction or event

a contingent liability: A) is always of a specific amount B) a potential obligation that depends on a future event arising out of a past transaction or event C) is an obligation not requiring future payment D) is an obligation arising from the purchase of goods or services on credit E) is an obligation arising from a future event

d) voucher system

a set of procedures and approvals that is designed to control cash disbursements and the acceptance of obligations is referred to as a(n): a) internal cash system b) petty cash system c) cash disbursement system d) voucher system e) cash control system

B) current liabilities

obligations due to be paid within one year or within the company's operating cycle, whichever is longer are: A) current assets B) current liabilities C) earned revenues D) operating cycle liabilities E) bills

C) is a current liability for retailers

sales tax payable: A) is an estimated liability B) is a contingent liability C) is a current liability for retailers D) is a business expense E) is a long-term liability

c) invoice

the document that is an itemized statement of goods prepared by a vendor listing the customer's name, items sold, sales prices, and terms of the sale is the: a) purchase requisition b) purchase order c) invoice d) receiving report e) invoice approval

C) current liabilities

the employer should record payroll deductions as: ** a) employee receivables B) payroll taxes C) current liabilities D) wages payable E) employee payables

C) the use of the allowance method of accounting for bad debts

the matching principle requires: A) that expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user B) the use of the direct write-off method for bad debts C) the use of the allowance method of accounting for bad debts d) that bad debts be disclosed in the financial statements E) that bad debts not be written off