Accounting final exam missed questions
Interest expense is recorded in the period in which A.) the interest is paid B.) the interest in incurred C.) The interest is paid or incurred D.) The interest is paid AND incurred
B.)
Which of the following is not deducted from an employees salary? A.) FICA taxes B.) Unemployment taxes C.) Income Taxes D.) employee portion of insurance and retirement payments
B.) unemployment
Aviation Systems sells its products with a three-year manufacturing warranty. The company's sales revenue is $600,000. Based on prior experience, the company estimates that warranty costs are 5% of sales revenue. Actual warranty costs related to these sales were $5,000 during the year. How much warranty expense should the company record this year? A.) $30,000 B.) $25,000 C.) $10,000 D.) $5,000
A.) $30,000
The seller collects sales taxes from the customer at the time of sale and reports the sales taxes as A.) Sales tax expense B.) Sales tax revenue C.) sales tax Receivable D.) Sales tax payable
D.) sales tax payable
Assuming a current ratio of 1.0 and an acid-test ratio of 0.75, how will the purchase of inventory with cash affect each ratio? A.) Increase the current ratio and increase the acid-test ratio. B.) .No change to the current ratio and decrease the acid-test ratio . C.) Decrease the current ratio and decrease the acid-test ratio. D.) Increase the current ratio and decrease the acid-test ratio.
D.) why? Acid-test ratio does not include inventory, so purchase of inventory with cash would reduce the acid-test ratio Current ratio will not be affected as it includes both cash and inventory so net affect will be zero.
When a customer pays in advance for a product or service , the advance payment received by the company is recorded as: A. A debit to an asset and a credit to a liability account B. A debit to a revenue and a credit to an asset account c. A debit to an asset and a credit to a revenue account D. a debit to a liability and a credit to a revenue account
A.
Pizza Shop sells toaster ovens with a one-year warranty to fix any defects. For the current year, 100 toaster ovens have been sold. By the end of the year 4 ovens have been fixed for an average of $80 each. Management estimates that 5 more of the 100 sold will need to be fixed next year for an estimated $80 each. For how much should Pizza Shop report warranty liability at the end of the current year? A.) $400 B.) $320 C.) $720 D.) $0
A. Warrant liability is to be reported for the estimated ovens to be fixed in the next year which is 5 in the given question.
When a product or service is delivered to a customer that previously paid in advance, the delivery is recorded as: A) A debit to a revenue and a credit to an asset account. B) A debit to a revenue and a credit to a liability account. C) A debit to a liability and a credit to a revenue account .D) A debit to an asset and a credit to a revenue account
C.
The city of summer ton has a sales tax rate of 8%. a local convenience store sells merchandise, and the customer pays a total of $38.34. What effect does this transaction have on total liabilities? A.) Increase of $3.07 B.) Decrease of $38.34 C.) increase of $2.84 D.) No effect
C.)
Suppose that Neuman Exploration Tours has filed a lawsuit against a competitor for an alleged trademark violation. At the end of the year, Neuman's attorney estimates that the company will likely win the lawsuit and be awarded between $1.5 and $2 million, with the most likely amount being $1.8 million. How much should Neuman record as a gain? A) 2.0 million B) 1.8 Million C) 1.5 million D) 0
D. 0
Smith Co. filed suit against Western, Inc., seeking damages for patent infringement. Western's legal counsel believes it is probable that Western will settle the lawsuit for an estimated amount in the range of $75,000 to $175,000, with all amounts in the range considered equally likely. How should Western report this litigation? A.) as Ann asset for $125,000 B.) As a gain for $125,000 C.) AS both an asset and a gain for $125,000 D.) No Asset Or gain is reported
D.) none