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Study Resources (Accounting)

21) Repairs made to equipment as part of a yearly maintenance project would be recorded in the journal by: A) debiting Equipment B) debiting Repair Expense C) debiting Depreciation Expense D) debiting Accumulated Depreciation 22) Treating a capital expenditure as an immediate expense: A) understates expenses and overstates owners' equity B) understates expenses and understates assets C) overstates.
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6.3  Show how accounting principles relate to inventory 1) When applying the lower-of-cost-or-net-realizable-value rule, market value generally refers to: A) net realizable value of the inventory B) sales price of the inventory C) sales price less cost of selling it D) fair market value of the inventory on purchase date 2) If year-end inventory is reduced.
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23) Inventory data for Hot Buys Company for January 2011 are as follows: January 1 balance80 units at $25 January 10 purchase100 units at $28 January 15 sale120 units January 21 purchase90 units at $32 January 28 sale110 units Using FIFO, compute ending inventory as of January 31, 2011, and determine cost of goods sold for.
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28) Carleton Corporation purchased machinery on October 1, 2010, at a total cost of $98,000. Estimated residual value is $8,000, estimated life of the machinery is 6 years or 50,000 hours. During 2010 and 2011, the machinery was used 1,400 and 8,760 hours, respectively. Compute depreciation under straight-line, units-of-production, and double-declining-balance.
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11) When applying the lower-of-cost-or-net-realizable-value rules to ending inventory valuation, market value generally refers to the cost at which the company could sell a unit of inventory. 12) The lower-of-cost-or-net-realizable-value rule applies only when a company uses the FIFO inventory valuation method. 13) The following information is available for Digital Image Corporation.
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11) Aviation Holdings Corporation's sales for the day totalled $10,552. Jensen collected an additional 7.50% in sales tax. The entry to record the day's sales includes a: A) debit to Sales Tax Expense B) debit to Sales Tax Payable C) credit to Sales Tax Expense D) credit to Sales Tax Payable 12) Dreams Take Flight.
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5.5  Account for notes receivable 1) When a note matures, the payee should record: A) interest payable B) interest expense C) interest revenue D) unearned revenue 2) When a note matures, the maker should record: A) interest expense B) interest revenue C) interest receivable D) unearned revenue 3) A written promise to pay a specified amount of money at a particular.
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21) The effective-interest method of amortization keeps interest expense at the same dollar amount of the bond's carrying value for every interest payment over the bond's life. 22) Interest expense will decrease each period if a company uses the effective-interest method of amortization and the bonds are issued at a discount. 23).
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6.5  Estimate iniventory by the gross profit method 1) Average inventory is equal to: A) beginning inventory plus cost of goods sold divided by two B) beginning inventory plus ending inventory divided by two C) cost of goods sold plus purchases divided by two D) ending inventory plus cost of goods sold divided by two 2).
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6.4  Use inventory in decision making 1) Inventory turnover is calculated by: A) dividing average inventory by cost of goods sold B) dividing cost of goods sold by average inventory C) multiplying average inventory by cost of goods sold D) subtracting ending inventory from cost of goods sold 2) The gross margin rate is equal to: A).
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6.6  Show how inventory errors affect the financial statements 1) An error in the ending inventory for the year ended December 31, 2010: A) automatically creates errors in cost of goods in the 2010 and 2011 financial statements B) has no effect on the 2010 financial statements but will create an error in.
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1) The largest expense category on the income statement of most merchandising companies is: A) cost of goods sold B) other expenses C) selling expenses D) administrative expenses 2) Which of the following would not be included in the Inventory account on a merchandising company's balance sheet? A) customs duties B) sales taxes received C) shipping costs from.
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40) Chapter 11 Inc. entered into the following transactions relating to notes payable: Sept.1 Purchased inventory costing $48,000 by signing an 8-month, 6% note payable. Nov.1 Purchased inventory costing $30,000 by signing a 1-year, 7% note payable. a. Prepare journal entries to record the above transactions. b. Assuming Chapter 11 Inc. has a December.
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11) FIFO income typically is less realistic compared to the net income under weighted-average cost. 12) A company may use more than one type of inventory method.  For example it may use specific identification for one type of inventory and FIFO for another. 13) In Canada most companies use the FIFO method. 14).
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21) Book value is determined by subtracting the salvage value from the cost of an asset. 22) The terms residual value and carrying value are synonymous. 23) Double-declining-balance depreciation computes annual depreciation by multiplying the asset's carrying value by two times the straight-line rate. 24) Regardless of the method of depreciation used, accumulated.
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31) Predecessor Company Inc. has outstanding $8,000,000 of 9%, 15-year callable bonds with a carrying value of $7,750,000 and a call price of 103 1/2. The current market price of the bonds is 105 1/2. a.Should Predecessor Company Inc. call the bonds or purchase them on the open market? b.Prepare the entry.
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8.4  Measure interest expense 1) Under the effective-interest method of amortizing bond premiums, the interest expense recorded for each semi-annual interest payment: A) will increase over the life of the bond B) is equal to the carrying value of the bond times the contract rate of interest for each semi-annual interest period C) is.
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20) The following data pertain to Home Office Company for the year ended December 31, 2011: Sales (25% were cash sales) during the year$1,100,600 Cost of goods sold during the year690,300 Beginning inventory319,800 Purchases (10% were cash purchases) during the year738,200 a.Prepare journal entries to record sales, cost of goods sold, and the purchase of.
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23) Foothills Industries gathered the following data for the year ended December 31, 2010, related to its equipment.              Accumulated EquipmentDepreciation January 1, 2010, balance$88,000$40,000 Total debits to the account 55,000? Total credits to the account? 56,000 December 31, 2010, balance 92,000 57,000 Based on the above data, prepare the journal entry to record the sale of.
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13) In 2010, Norwood Limited had sales and cost of sales of $250,000 and $62,500 respectively.  The company had shareholders equity of $100,000 and its assets were $125,000.  The company's gross margin for 2010 was: 14) Calculate gross margin percentage for the following independent situations. a.Net sales$500,000 Purchases during the year340,700 Ending inventory35,000 Beginning inventory28,000 b.Net.
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18) Determine the effect on cost of goods sold, total assets, and gross margin for 2010 and 2011 if the following inventory errors are not corrected. Indicate your answer with (+) for overstated, (-) for understated, and (0) for no effect. a.Beginning inventory for 2010 is understated b.Beginning inventory for 2010 is.
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8.3  Account for bonds payable 1) The carrying amount of bonds issued at a discount is calculated by: A) subtracting Discount on Bonds Payable from Bonds Payable B) subtracting Interest Payable from Bonds Payable C) subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable D) subtracting Interest Expense from Bonds.
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11) Overstating ending inventory in the current period will understate the following year's net income. 12) An error in the valuation of beginning inventory in the current period will affect the following year's net income. 13) If a company makes an error when counting ending inventory in 2010, the effect of the.
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8.5  Understand the advantages and disadvantages of borrowing 1) All of the following are advantages of issuing stock except: A) less risky to the issuing corporation B) creates no liabilities for the corporation C) creates no interest expense which must be paid D) generally results in a higher earnings per share 2) All of the following.
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11) On January 2, 2009 McNally's Extra Corporation acquired equipment for $120,000. The estimated life of the equipment is 5 years or 20,000 hours. The estimated residual value is $20,000. If McNally's Extra Corporation uses the straight-line method of depreciation, what will be the debit to Depreciation Expense for the.
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32) Discuss the type of tangible long-lived assets Canadian Tire owns and controls, and how they are typically recorded on the balance sheet. 33) Rocky Mountain Water Corporation paid $270,000 to purchase equipment for use in its manufacturing operations. In addition, Rocky Mountain Water Corporation incurred the following expenditures relating to.
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7.2  Account for depreciation 1) The process of allocating a capital asset's cost to expense over the period the asset is used is called: A) accumulation B) depreciation C) interest D) repairs expense 2) Which of the following depreciation methods best fits those assets that tend to wear out before they become obsolete? A) depletion method B) straight-line.
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1) Which of the following expenses is most closely associated with tangible long-lived assets? A) accumulation B) depreciation C) interest D) depletion 2) Which of the following is not a long-lived asset? A) supplies B) furniture C) buildings D) land 3) All amounts paid to acquire a long lived-asset and to get it ready for its intended use are referred.
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6.2  Understand the various inventory methods 1) Given the following data, what is the weighted-average cost of ending inventory rounded to the nearest whole dollar? (Do not round in the process of your calculations, only round your final answer.) Sales revenue100 units at $15 per unit Beginning inventory40 units at $9 per unit Purchases80.
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28) At year end the Carleton Corporation reviewed all of its property, plant and equipment assets for impairment. It discovered that its boiler's recoverable amount exceeded its carrying value by $5,500.  Another one of its assets, a warehouse building previously written down for an impairment of $12,750 experienced a financial.
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19) Eloquent Media Ltd. completed the following transactions: Sept. 14, 2010Provided services to Inga Corporation on account, $3,000, terms 30 days. Oct. 14, 2010Accepted a 90-day, 8% note from Inga Corporation to settle its account. Dec. 31, 2010Accrued interest on the note from Inga Corporation. (Round to the nearest dollar.) Jan. 12, 2011Received amount.
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8.2  Understand bonds payable 1) Secured bonds are also called: A) mortgage bonds B) callable bonds C) debenture bonds D) convertible bonds 2) Bonds which are backed only by the good faith of the borrower are referred to as: A) mortgage bonds B) secured bonds C) registered bonds D) debenture bonds 3) Bonds which mature at the same time are called: A).
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7.6  Report long-lived assets on the statement of cash flows 1) Prepare adjusting journal entries dated December 31 of the current year for the following independent situations. a.Hops Corporation acquired several patents on March 1 of the current year for a total price of $48,000. The patents have an estimated remaining legal.
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7.5  Account for intangible assets and amortization 1) All of the following are intangible assets except: A) trademarks B) natural gas C) goodwill D) copyrights 2) Copyrights are granted for the life of the author plus: A) 10 years B) 40 years C) 50 years D) 100 years 3) Goodwill is equal to the excess of the cost of an acquired.
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7.4  Analyze the effect of property, plan, and equipment derecognition 1) Rhoundakona Corporation bought a capital asset on January 1, 2009, at a cost of $35,000. Estimated residual value is $5,000 and the estimated useful life is 8 years. The company uses straight-line depreciation. On January 1, 2012, Rhoundakona's management sells.
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46) Optura Computer Company uses the allowance method to account for bad debts. Indicate the effect of each of the following transactions on gross Accounts Receivable, the Allowance for Uncollectible Accounts, net Accounts Receivable, and Uncollectible-Accounts Expense. Use (+) for increase, (-) for decrease, and (0) for no effect. GrossAllowance for.
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1) Current liabilities are obligations due within: A) one year or within the company's normal operating cycle if it is longer than one year B) one year or within the company's normal operating cycle if it is shorter than one year C) one month or within the company's normal operating cycle if it.
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7.3  Examine additional depreciation topics 1) Hot Wort Ltd. purchased equipment on April 1, 2011, for $140,000. The residual value is $20,000 and the estimated life is 6 years or 55,000 hours. Compute depreciation expense for the year ending December 31, 2011 if Hot Wort Ltd. uses the straight-line method of.
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