Accounting 1 Quizzes Ch. 8-10

Which of the following would appear on the balance sheet as a current liability?

a. A loss from a n anticipated strike by employees b. Potential damages form possible explosions in a fireworks factory c. Premium offers in cereal boxes d. the possible loss forma lawsuit the answer is c

which of the following statements is correct

a. Bonds are issued at a price that reflects the stated rate of interest on the day the bond is purchased b. If the face rate of interest on a bond is not equal to the market rate of interest, then the company desiring tissue the bonds must reprint its bond certificates c. the actual issue price of a bond represents the presents value of all future cash flows relative to the bond d. The market rate of interest has no bearing not h selling price of the bonds the answer is c

Boston Trombley Company is a defendant in a lawsuit alleging damages of $3 billion. it is probable that Boston Trombley will lose the suit. The litigation is anticipated to continue for several years, 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

Which of the following is not classified as a long-term liability?

a. Bonds payable b. Capital lease obligations c. Current portion of long-term debt d. Mortgage payable the answer is c

The current portion of long-term debt is a balance sheet item for Flavorful Products Company. How would it most likely be classified on the balance sheet?

current liability

The effect of recording depreciation for the year is a(n)

decrease in assets and a decrease in net income

Bing's Export 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 expects miles over five years is 100,000. What is the amount by which double-declining-balance depreciation exceeds straight-line depreciation over the 5-year life of the truck?

$0

Royal Company purchased a dump truck at the beginning of 2012 at a cost of $60,000. The truck had an estimated life of 6 years and an 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

Waxman Company purchased a patent for $170,000 at the beginning of 2018, and estimated that is 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?

$17,000

If a company purchases $3,000 worth of inventory with terms of 1/15, n30 and pays within 15 days, tenth amount paid to the seller would be

$2,970

On January 2, 2018, Roof Master Construction, Inc. issued $500,000, 10-year bonds for $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

$500,000

Bonds into amount of $100,000 and life of 10 years were issued by the Focus Company. if the face rate is 6% and interest is paid semiannually, what would be the total amount of interest paid over the life of the bonds?

$60,000

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 salary expense for January, 2019. It's beginning balance in salaries payable was $30,000 and its ending balance was $4,000. How much was paid in cash for salaries during January, 2019

$96,000

If current assets amount to $62,000, total assets $350,000, current liabilities $31,000, and total liabilities of $125,000, then the current ratio is

2.0 to 1

On January 2, 2013, Hannah Company sold a machine for $1,000 that it had used for several years. The machine cost $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 the machine?

Loss of $2,000

Which of the following statements regarding contingencies is true?

a. Contingencies that are probable and not estimable are disclosed in the notes to the financial statements b. Contingencies that are probable and not estimable appear on the balance sheet c. Contingencies that are remote but estimable are disclosed int denotes to the financial statements d. Contingent assets are recorded on the balance sheet, but not in the notes to the financial statements. the answer is a

Which of the following accounts is classified as a one term liability?

a. Taxes payable b. Note payable, due in three (3) years c. Salaries payable d. Accounts payable

Which of the following sets of factors is need to calculate depreciation on plant and equipment?

a. The assets acquisition cost, replacement cost, and its estimated residual value b. The estimated residual value o the asset, its replacement cost, and its market value c. The asset's replacement cost, its estimated life, adits estimated residual value d. The estimated life of the asset, its acquisition cost, and its estimated residual value the answer is d

Borden Company incurred the following costs to acquire and prepare land for a new parking lot: purchase price for land, cost to clear the land, cost of paving, lighting for the parking lot, and landscaping for the parking lot. How should the company determine which costs should be recorded as Land Improvements and which cost should be recorded as Land?

a. The costs with a limited life will increase Land, and the costs with an unlimited useful life will increase Land Improvements b. The costs with an unlimited life will increase Land, and the costs with a limited useful life will increase land improvements c. The costs to be depreciated will increase Land, and the costs that will not be depreciated will increase Land Improvements the answer is b

Which of the following statements is true with respect to long-term liabilities?

a. They are obligations that will be satisfied within one year b. An account payable is a good example of a long-term liability because it is interest-bearing c. Long-term liabilities include bonds, other long-term liabilities and deferred income taxes d. accused expenses are considered to be long term liabilities the answer is c

All of the following are characteristics of current liabilities except:

a. They may be replaced with a new short-term liability rather than being paid in cash b. They may involve estimated amounts c. They are due within one year or within the operating cycle, whichever is longer. d. all there of the above are characteristic of current liabilities the answer is d

Which of the following is an example of capital expenditure?

a. cleaning the carpet in the front room b. tune-up for a company truck c. replacing an engine in a company car d. replacing all burned-out light bulbs in the factory the answer is c

Bonds are a popular source of financing because

bond interest expense is deductible for tax purposes, while dividends paid on stock are not

When bonds are issued by a company, the accounting entry shows an

increase in assets and an increase in liabilities

Operating assets with no physical properties are called

intangible assets

On May 1, the Chris Company borrowed $30,000 forth Third Street Bank on a 1-year, 6% note. if the company keeps its records on a calendar year, an adjustment is needed on December 31 to increase

interest payable, $1,200

Depreciation is a process by which

the cost of plant and equipment is allocated to expose over the time periods which benefit form these of the asset

Using different depreciation methods for book purposes versus tax purposes for the same asset is

the direct result of the differing goals of financial and tax accounting

Land is not depreciated because it

will provide future benefits for a many for an unlimited period of time