ACC- Chapters 8,9,10
$211,530
A coal mine cost $1,000,000 and is estimated to hold 52,000 tons of coal. There is no residual value. During the first year of operations, 11,000 tons are extracted and sold. Calculate depletion expense for the first year. (Round any intermediate calculations to the nearest cent.)
False
A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.
a loss of $5,000
A photocopier cost $95,000 when new and has accumulated depreciation of $90,000. If the business discards this plant asset, the result is ________.
True
A receiving report should be matched with the supplier invoice before a payment to the supplier is approved.
Electronic Data Interchange
A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.
False
A trademark should not be amortized over its useful life.
True
According to Generally Accepted Accounting Principles, if the fair value of goodwill decreases below its book value, an impairment loss must be recorded.
False
Accounts Receivable are generally reported at the gross amount on the balance sheet.
True
Accounts receivable are also known as trade receivables.
True
An asset is considered to be obsolete when a newer asset can perform the job more efficiently.
when a newer asset can perform the job more efficiently than the old asset can
An asset is considered to be obsolete ________.
True
An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account. Cash plus petty cash tickets total the amount allocated to the petty cash fund.
False
As long as the same person deposits customer checks and records the deposits into the journal, there will be good internal control over cash receipts.
True
A business, which has a calendar year accounting period, purchased an asset on March 1, 2016. The business disposed of the asset on August 31, 2017. For the calendar year 2017, depreciation should be calculated from January 1 to August 31.
True
A point-of-sale terminal provides control over cash receipts over the counter.
True
Businesses are required to use Modified Accelerated Cost Recovery System (MACRS) for tax purposes.
competent, reliable, and ethical personnel
Cadmia Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. The clerk has not yet been adequately trained on the maintenance needs of the equipment. In the above situation, which internal control procedure needs strengthening?
$1,350
Calculate the interest on a 90-day, 12% note for $45,000. (Use a 360-day year to compute interest. Round your answer to the nearest dollar.)
False
Capitalizing a cost involves crediting the asset account.
total current liabilities
Cash and cash equivalents are divided by ________ to determine the cash ratio.
True
Discarding plant assets involves disposing of the asset for no cash.
True
Dividends receivable, interest receivable, and taxes receivable are generally categorized as other receivables.
True
External auditors evaluate company controls to ensure the financial statements are presented fairly, in accordance with Generally Accepted Accounting Principles.
True
For strong controls over cash receipts, the checks to be deposited should be sent to the treasurer, and the remittance advices should be sent to the accounting department.
the write off has no effect on net income
Grabbe Enterprises uses the allowance method to account for uncollectible receivables. When an uncollectible account is written off, ________.
False
If an asset is disposed of during the year, there is no need to calculate depreciation from the beginning of the year of disposal to the date of disposal.
True
In a bank reconciliation, a NSF check will be shown on the book side of the reconciliation.
False
Interest is generally stated as a monthly rate.
True
Internal auditors are employees of the business who ensure that employees are following company policies and that operations are running efficiently.
$252,083
On August 14, First Avenue Bank lent $250,000 to City Cafe on a 75 day, 4% note. What is the maturity value of the note? (Use a 360-day year and round answers to the nearest dollar.)
Oct. 28
On August 14, Main Street Bank lent $300,000 to City Cafe on a 75 day, 5% note. What is the maturity date of the note?
$1,210
On December 1, 2017, Falcon, Inc. sold machinery to a customer for $22,000. The customer could not pay at the time of sale but agreed to pay 6 months later and signed a 6-month note at 11% interest. How much interest revenue was earned for the entire term of the note? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
$204,800
On January 1, 2017, Anodel, Inc. acquired a machine for $1,080,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $56,000. Calculate the depreciation expense per year using the straight-line method.
$32,000
On January 1, A Plus Services has the following balances: Accounts Receivable $28,000 (debit) Bad Debts Expense $0 A Plus Services has the following transactions during January: Credit sales of $110,000, collections of credit sales of $87,000, and write-offs of $19,000. A Plus Services uses the direct write-off method. At the end of January, the balance of Accounts Receivable is ________.
$524,333
On July 7, Landview Bank lent $520,000 to Classical Music Shop on a 60 day, 5% note. What is the maturity value of the note? (Use a 360-day year and round answers to the nearest dollar.)
$117,700
On October 1, 2017, Parkin, Inc. made a loan to one of its customers. The customer signed a 6-month note for $110,000 at 14%. Calculate the maturity value of the note. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
$500
On October 1, 2017, Parsons, Inc. sold machinery to a customer for $20,000. The customer could not pay at the time of sale, but agreed to pay 10 months later, and signed an 10-month note at 10% interest. How much interest revenue was earned during 2017? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
True
Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.
promoting operational efficiency
Reducing expenses to increase operating profit is representative of ________.
False
Residual value is also known as depreciable cost.
$234,150
Steel Rolling Corp. purchased a mine, which holds an estimated 39,000 tons of iron ore, on January 1, 2017, for $522,000. The mine is expected to have zero residual value. The business extracted and sold 17,500 tons of ore in 2017 and 15,800 tons of ore in 2018. What is the depletion expense for 2017? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
False
The accounts receivable turnover ratio indicates whether a company could pay all its current liabilities if they were to become due immediately.
Pioneer Corp.
The cash ratios of four companies are listed below. Company Cash Ratio Juan Corp. 0.23 Rose, Inc. 0.14 Freelance, Inc. 0.20 Pioneer Corp. 0.28 Which company has the maximum ability to repay its current liabilities?
False
The collection period of accounts receivable is usually long: therefore, it is classified as a long-term asset on the balance sheet.
False
The difference that arises between the balance on the bank statement and the balance on the company's books because of a time lag in recording transactions is known as a permanent difference.
maker of the note
The entity that signs the promissory note and promises to pay the required amount is the ________.
True
The environment is the culture of a business, and it starts with the CEO or CFO and the top managers.
the allowance method and the direct write-off method
The two methods of accounting for uncollectible receivables are ________.
True
The aging-of-receivables method is a balance sheet approach of estimating uncollectible accounts.
False
The percent-of-sales method calculates bad debts expense based on a percentage of net cash sales.
False
The percent-of-sales method, used to compute bad debt expense, is also known as the balance sheet approach.
a debit to Bad Debts Expense account
Under the direct write-off method, the entry to write off an uncollectible account will include ________.
$51,625
What is the maturity value of a 3-month, 13% note for $50,000? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
credit to Accounts Receivable and a debit to Bad Debts Expense
When a company is using the direct write-off method, and an account is written off, the journal entry consists of a ________.
the amount of bad debts expense is estimated at the end of the accounting period
When a company uses the allowance method to measure bad debts, ________.
False
When a plant asset is sold for less than its book value, a gain is recorded.
reduces the amount of the Allowance for Bad Debts account
When using the allowance method, the write-off of a receivable ________.
It is used in the operations of a business.
Which of the following is a characteristic of a plant asset, such as a building?
The store clerk deposits the cash in the bank.
Which of the following is not an appropriate internal control for cash receipts over the counter?
attaching electronic sensors to merchandise inventory
Which of the following is representative of safeguarding assets?
It is shown as a contra account related to accounts receivable.
Which of the following is true of the balance sheet presentation of the Allowance for Bad Debts?
the purchase order
Which of the following items must be examined by the controller or treasurer before signing a check?
It is an order to purchase goods from a supplier.
Which of the following statements describes a purchase order?
Depreciation is recorded on all plant assets.
Which of the following statements is incorrect?
It shows each authorized person's signature for a bank account.
Which one of the following is true of a signature card?
Bad Debts Expense Dr-125 Accounts Receivable Cr-125
Charms, Inc. has determined that an account receivable of $125 is uncollectible. The company uses the direct write-off method. Which of the following entries is required to record the write-off?
$731,600
Ivorycoast, Inc. purchased a van on January 1, 2017, for $890,000. Estimated life of the van was five years, and its estimated residual value was $98,000. Ivorycoast uses the straight-line method of depreciation. Calculate the book value of the van at the end of 2017.
