accounting end of semester assesment

Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. Determine the second-year depreciation using the straight-line method.

$9,600 Response Feedback: Rationale: Annual Depreciation = (Cost - Residual Value) / Useful Life = ($57,000 - $9,000) / 5 = $9,600 Depreciation expense for the second year = $9,600

On July 8, Williams Company issued an $90,000, 6%, 120-day note payable to Brown Industries. Assuming a 360-day year and the fiscal year of the seller end July 31, what is the maturity value of the note?

$91,800 Response Feedback: Rationale: Maturity value of the note = [$90,000 + ($90,000 × 6% × 120 ÷ 360)] = $91,800

Units of Output Method

Unit of output can be expressed in terms of hours, miles driven, or quantity produced Cost - Residual Value/Total Units of Output

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

c. gain on sale of land

An analysis in which all the components of an income statement are expressed as a percentage of sales is a

c. vertical analysis

Cash paid to purchase long-term investments would be reported in the statement of cash flows in

d. the cash flows from investing activities section

The percentage analysis of increases and decreases in individual items in comparative financial statements is called

horizontal analysis

A debit balance in the Allowance for Doubtful Accounts

indicates that actual bad debt write-offs have exceeded previous provisions for bad debts

The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivable are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

$750 Response Feedback: Rationale: Credit to Allowance for Doubtful Accounts = Uncollectible accounts estimate − Unadjusted allowance for doubtful accounts = $640 − ($110) = $750

On July 8, Williams Company issued an $90,000, 6%, 120-day note payable to Brown Industries. Assuming a 360-day year and the fiscal year of the seller end July 31, what is the interest expense?

. $345 Response Feedback: Rationale: Interest of the note = $90,000 × 6% ×( 120 ÷ 360) = $1,800 Per day: $1,800/120= $15 July 31-July 8= 23 X 15= 345

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of:

. Debit to Cash for $750,000 Credit to Preferred Stock for $500,000 and a credit to Paid-In Capital in Excess of Par—Preferred Stock for $250,000 Response Feedback: Rationale: Total cash raised through the issue of shares = Number of shares issued × Par value of the stock = 10,000 × $50 = $500,000 Paid-In Capital in Excess of Par—Preferred Stock = $750,000 - $500,000 = $250,000

Assume the following sales data for a company: Current year $325,000 Preceding year 250,000 ​ What is the percentage increase in sales from the preceding year to the current year?

30% Response Feedback: Rationale: Percentage increase in sales in the current year = [(Current year sales - Preceding year sales) / Preceding year sales] × 100 = [($325,000 - $250,000) / $250,000] × 100 = [$75,000 / $250,000] × 100 = 30%

If Dakota Company issues 1,500 shares of $6 par common stock for $75,000,

Paid-In Capital in Excess of Par will be credited for $66,000 Response Feedback: Rationale: Total cash raised through the issue of shares = $75,000 Par value of common stock issued = ​1,500 shares × $6 = $9,000 Paid-In Capital in Excess of Par = $75,000 - $9,000 = $66,000

Straight-line Method

Easiest method Cost - Residual Value/ Useful Life

Face Value

Market rate equals contract rate

Discount

Market rate is greater than contract rate

Premium

Market rate is less than contract rate

On July 8, Williams Company issued an $90,000, 6%, 120-day note payable to Brown Industries. Assuming a 360-day year and the fiscal year of the seller end July 31, what is the maturity date of the note?

November 5 Response Feedback: Rationale: July: 23 August: 31 September: 30 October: 31 November: ? Total: 115 120-115= 5 Only need 5 days in November.

Double Declining Balance Method

Residual Value is not considered Rate X Cost= Depreciation Expense; Cost - Depreciation Expense

The current ratio is

a. used to evaluate a company's liquidity and short-term debt paying ability

The percent of fixed assets to total assets is an example of

a. vertical analysis

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

c. a decrease in accounts receivable

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry is required in the company's accounts?

debit Cash; credit Accounts Payable

To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a

debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under

investing activities