AC 210 Exam 3 FInal

Calculate the accumulated depreciation of a three-year-old machine that cost $546,000, has an estimated residual value of $26,000, and has an estimated useful life of 26,000 machine hours. The company uses units-of-production depreciation and ran the machine 6,000 hours in year 1, 8,000 hours in year 2, and 9,000 hours in year 3. a. $460,000 b. $546,000 c. $483,000 d. $520,000

a. $460,000

1. Houston Company purchased a new building. Which of the following of expenditures made by Houston Company will not be capitalized? a. $6,000 paid for a party to celebrate the grand opening. b. $54,000 to purchase the building. c. $800 for legal fees. d. $2,500 for appraisal fees.

a. $6,000 paid for a party to celebrate the grand opening.

1. Arlington Inc.'s Income statement showed Net Income of $57,600 and Depreciation Expense of $9,200. Accounts Receivable increased $3,750, Inventory increased $3,200, Supplies decreased $500, Accounts payable increased $2,700 and Accrued Liabilities decreased $1,900. What is Arlington's net cash flow provided by operating activities? a. $61,150 b. $63,050 c. $74,050 d. $72,450

a. $61,150

1. Daffy Duct, Inc. issued 10,000 shares of $1 par value common stock at $5 per share. What is the effect of this transaction on the accounting equation? a. 50,000 increase in assets and stockholder's equity b. 10,000 increase in assets and stockholder's equity c. 50,000 increase in liabilities and stockholder's equity d. 10,000 increase in stockholders equity only

a. 50,000 increase in assets and stockholder's equity

1. Company X paid Company Y $2.85 million for a new plant. During the same accounting period, Company X experienced the following changes in its balance sheet: Cash decreased by $358,000, Accounts Receivable increased by $322,800, Inventory increased by $277,300, Property, Plant, and Equipment increased by $754,400, and Bonds Payable increased by $3 million. The net cash flow from financing activities is: a. An inflow of $3 million. b. An inflow of $2.85 million. c. An inflow of $754,400. d. An outflow of $358,000.

a. An inflow of $3 million.

On January 1, 2017, X-it Company bought a new delivery truck for $30,000. X-it plans to use the truck for 4 years, after which it will be sold for $6,000. Depreciation expense for 2018, the 2nd year of use, using double-declining balance equals____________. a. $15,000 b. $7,500 c. $6,000 d. $4,500

b. $7,500

1. Which of the following does not apply to a contingent liability under US GAAP? a. It should be reported on the balance sheet if the loss may possibly occur and can be reasonably estimated. b. It should not be reported if the loss is remote and unable to be estimated. c. It should be reported on the balance sheet if the loss will probably occur and can be reasonably estimated. d. It should be in the notes to the financial statements if the loss may possibly occur and can be reasonably estimated.

a. It should be reported on the balance sheet if the loss may possibly occur and can be reasonably estimated.

1. Vango, Inc. sold its van for $10,000 cash. The van's original cost was $40,000, and its accumulated depreciation was $32,000. When recording the sale, Vango should record a: a. gain of $2,000. b. loss of $2,000. c. loss of $8,000. gain of $6,000

a. gain of $2,000.

In recording the acquisition cost of an entire business: a. goodwill is recorded as the excess of cost over the fair value of identifiable net assets. b. assets are recorded at the seller's book values. c. goodwill, if it exists, is never recorded. d. goodwill is recorded as the excess of cost over the book value of identifiable net assets.

a. goodwill is recorded as the excess of cost over the fair value of identifiable net assets.

1. Based on the following information, compute cash flows from investing activities under GAAP. Cash collections from customers $800 Purchase of used equipment 450 Depreciation expense 200 Sale of investments 200 Dividends received 100 Interest received 200 a. $250 cash inflow b. $250 cash outflow c. $1,950 cash inflow d. $550 cash inflow

b. $250 cash outflow

Quiche & Tell, Inc. has discovered that its equipment has been impaired because it has become obsolete. Recording this impairment will ___. a. Cause a decrease in liabilities. b. Cause a decrease in assets. c. Cause an increase in stockholders equity. d. Have no effect on the accounting equation.

b. Cause a decrease in assets.

1. Which of the following statements regarding shares is false? a. Authorized shares are the maximum number of shares of stock that can be issued to the public. b. Outstanding shares are the issued and unissued shares. c. Issued stock is equal outstanding shares or treasury shares. Treasury shares are shares that were repurchased by the corporation from stockholders.

b. Outstanding shares are the issued and unissued shares.

Which of the following statements is false? a. Extraordinary repairs, replacements, and additions are added to the appropriate asset accounts rather than being recorded as expenses. b. When an asset is sold and its book value exceeds its selling price, net income will increase. c. The book value of a long-lived asset declines over time, assuming no additions, replacements, or extraordinary repairs. d. Intangible assets are usually amortized using the straight-line method, with no residual value.

b. When an asset is sold and its book value exceeds its selling price, net income will increase.

Fandango, Inc. bought a new delivery van during the year. Which of these cost should be expense as ordinary repairs and maintenance? a. $2,000 paid to install shelves inside the van b. $20,000 cost of the van c. $100 oil change on van d. All of the above should be expensed.

c. $100 oil change on van

1. Brown Company has the following paid-in capital: Preferred stock, 6%, $5 par value, 100,000 shares authorized, 40,000 shares issued and outstanding for $2,000,000 and Common stock, $9 par value, 300,000 shares authorized, 220,000 shares issued and outstanding for $1,980,000. If the company pays a $30,000 dividend and the preferred stock is noncumulative, what is the amount the preferred stockholders will receive? a. $30,000 b. $18,000 c. $12,000 d. $0

c. $12,000

1. Gross earnings for the pay period are $100,000. Required payroll deductions are: FICA Tax 8150, Unemployment tax 12,000, Federal Income Tax $18,000 and State Income tax $3,850. What is the net pay to employees? a. $78,150 b. $130,000 c. $70,000 d. $61,850

c. $70,000

1. On January 1, Weldon Weston Co. purchased equipment for $200,000. It has an estimated useful life of five years and its residual value is $20,000. The company has a calendar year-end. Using the straight-line method, what is the book value of the equipment at the end of the third full year of use? a. $20,000. b. $36,000. c. $92,000. d. $108,000.

c. $92,000.

1. On November 1, 2017, ABC Corp. borrowed $100,000 cash on a 1-year, 6% note payable that requires ABC to pay both principal and interest on October 31, 2018. The journal entry on November 1, 2017 would include which of the following? a. Debit to Interest Expense $6,000 b. Credit to Note Payable $106,000 c. Credit to Note Payable $100,000 d. Credit to Cash $100,000

c. Credit to Note Payable $100,000

1. Significant non-cash investing and financing activities are reported in the: a. operating activities section of statement of cash flows b. investing activities section of statement of cash flows c. foot notes or separate notes to the financial statements d. financing activities section of statement of cash flows

c. foot notes or separate notes to the financial statements

1. After a 3-for-1 stock split, the par value of each stock is ____________ the par value prior to the split. a. the same as b. 3 times c. one third d. none of the above

c. one third

1. The net cash flow from operating activities is an inflow of $48,042, the net cash flow from investing activities is an outflow of $22,331, and the net cash flow from financing activities is an outflow of $28,597. If the beginning cash account balance is $12,383, what is the ending cash account balance? a. $41,776 b. $54,159 c. ($2,886) d. $9,497

d. $9,497

1. Which of the following regarding liabilities is false? a. Sales tax collected by a company is reported as a current liability until it is remitted (paid) to the taxing authorities. b. Deferred revenues represent a liability because goods or services have been paid for, but not yet provided to the customer. c. The current portion of long-term debt is an amount of principal that will be due for payment within one year of the balance sheet date. d. Accrued liabilities are created for expenses incurred and paid at the end of a time period.

d. Accrued liabilities are created for expenses incurred and paid at the end of a time period.

1. Refurbish, Inc. purchased 1,000 shares of its own stock at $8 a share. Later, it reissued the 1,000 shares for $10,000. The effect of the entry to record the sale of treasury stock causes which of the following statements to be true? a. Treasury stock will equal $2,000 b. Common stock will equal $4,000 c. Cash will be decreased by $10,000 d. Additional Paid-in Capital will be increased by $2,000

d. Additional Paid-in Capital will be increased by $2,000

1. If ABC Company issues bonds with a face value of $100,000 at prices of 110,000, the journal entry to record the transaction will not include which of the following? a. Debit to Cash of $110,000 b. Credit to Bonds Payable $100,000 c. Credit to Premium on Bonds Payable of $10,000 d. Credit to Discount on Bonds Payable of $10,000

d. Credit to Discount on Bonds Payable of $10,000

1. Which of the following statements is false? a. Maturity date is the date on which the bonds are due to be paid in full. b. A bond is issued at face value when the market rate and stated rate equal. c. Premium is the amount by which a bond's issue price exceeds its face value. d. Stated interest rate is the rate of interest that investors demand from a bond.

d. Stated interest rate is the rate of interest that investors demand from a bond.