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Study Resources (Accounting)

31) The journal entry to record $200,000 of bonds that were issued at 97 would be to: A) debit Cash, $194,000; debit Discount on bonds payable, $6,000; credit Bonds payable, $200,000. B) debit Cash, $194,000; credit Bonds payable, $194,000. C) debit Cash, $200,000; credit Bonds payable, $194,000; credit Premium on bonds payable, $6,000. D).
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8.2   Questions 1) When determining the cost of a plant asset, GAAP requires the use of the market value principle. 2) Neither land nor land improvements are depreciated. 3) When a company pays a single price for a group of assets, the purchase is referred to as a basket purchase. 4) Whether a building.
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21) Which would NOT be included in the recorded price of a piece of machinery? A) Installation costs B) Maintenance costs C) Delivery charges D) Sales taxes 22) Action Motorsports made a basket purchase involving four assets. Their market values were A: $45,000; B: $37,500; C: $41,000; and D: $53,000. The price Jim paid for.
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8.9   Questions 1) Long-term assets usually begin with the listing of natural resources first. 2) GAAP does not allow property, plant, and equipment to be shown at net book value on the balance sheet. 3) Intangibles, such as patents and copyrights, are generally listed after property, plant, and equipment and after natural resources.
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1) Credit sales are the most desirable form of sales. 2) The most common credit cards issued by financial institutions are Discover and American Express. 3) The most common types of financial institution credit cards are MasterCard and Visa. 4) MasterCard and Visa sales are treated like cash sales. 5) Most financial institutions charge.
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9.2   Questions 1) The largest portion of accounts payable for most merchandising companies is related to the purchase of inventory on account. 2) A transaction such as a utility bill to be paid in 30 days would be journalized with a debit to Utilities expense and a credit to Notes payable. 3) Making.
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9.6   Questions 1) Having liabilities classified incorrectly will have a big impact on the company's current ratio. 2) By NOT accruing warranty expense: A) reported liabilities will be overstated and net income will be understated. B) reported expenses will be overstated and reported liabilities will be understated. C) reported liabilities will be understated and net.
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11) A W-4 filled out by the employee does not designate their: A) marital status. B) withholding allowances. C) address. D) age. 12) Most single individuals will claim: A) 0 allowances. B) 0 or 1 allowances. C) 2 allowances. D) more than 2 allowances. 13) The lower the number of withholdings claimed on a W-4, the: A) higher the gross pay. B).
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21) Maverick, Inc. converted a $4,000 account receivable from Roberto to a 75-day, 8% note receivable. The maturity value (assume a 360-day year) that will be due from Roberto in 75 days (round to nearest dollar) is: A) $4,000. B) $4,067. C) $4,320. D) some other number. 22) ACME Corporation lent $25,000 to Hastings, Inc..
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9.3   Questions 1) Even liabilities of unknown amounts are required to be placed on the balance sheet. 2) Warranty expense must be estimated and matched to revenues. 3) Estimated liabilities are generally classified as long-term liabilities. 4) Warranty expense is always recorded in the period that the warranty claims are paid. 5) Warranty expense is.
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9.4   Questions 1) Contingent liabilities represent actual–NOT potential–obligations. 2) The accounting treatment of a contingent liability depends upon the likelihood of an actual obligation occurring. 3) A company that cosigns a loan with another company could incur a contingent liability. 4) There are times when contingent liabilities are never recorded. 5) The disclosure of a.
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16) Which of the following is TRUE? A) The allowance method requires a business to estimate bad debt expense. B) The allowance method requires a business to record only actual bad debt expense. C) The allowance method allows a business to choose between recording actual or estimated bad debt  expense. D) The allowance method.
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8.8   Questions 1) Equity securities which management intends to hold for less than one year would be considered other long-term assets. 2) Investments in debt securities, such as bonds, may be classified as either current or long-term assets. 3) Increases in the value of a security while the company still owns it are.
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8.7   Questions 1) The process of allocating the cost of natural resources is called depletion. 2) Computing depletion expense is much like computing depreciation under the straight-line method. 3) In computing depletion expense, salvage value is not part of the computation. 4) Items such as minerals are considered natural resources. 5) Pegasus Corporation purchased a.
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9.5   Questions 1) Bonds payable are supported by a promissory note. 2) A mortgage is a special type of long-term note payable. 3) A mortgage is a secured note because the building will serve as collateral. 4) Bonds are interest-bearing notes that are issued to a single lender. 5) A person or business who pays.
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10.3   Questions 1) Many companies raise capital by issuing stock directly to stockholders or by using an underwriter. 2) The issue price of the stock usually is equal to the par value of the stock. 3) A company can have a profit or loss when buying or selling its own stock. 4) When stock.
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41) Discount on bonds payable and Premium on bonds payable are examples of: A) contra-accounts. B) companion accounts. C) estimated accounts. D) equity accounts. 42) If a $6,000, 10 percent, 10-year bond was issued at 104 on October 1, how much will accrued interest payable be on December 31 if interest payments are made annually? A).
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11) Which intangible asset is recorded only when an acquiring company purchases another company? A) Franchise B) Goodwill C) Brand name D) Trademark 12) According to GAAP, goodwill is: A) amortized every year. B) recorded as a gain only when the goodwill is gaining value. C) recorded as a loss only when the goodwill is losing value. D) amortized.
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8.5   Questions 1) Disposal of a plant asset always occurs after the asset has been fully depreciated. 2) When an asset is disposed of, the current period's depreciation expense account must be updated to the time of the disposal. 3) The first step in recording a disposal transaction is to figure the gain.
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1) The majority of a company's liabilities are estimated liabilities. 2) Notes payable would be an example of a known liability. 3) A contingent liability arises because of a past event, but is dependent upon a future event. 4) A known liability is always classified as a current liability. 5) When a liability exists,.
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7) In response to a large number of high profile cases involving accounting fraud, the U. S. Congress in 2002 passed the: A) Internal Revenue Fraud Act. B) Securities and Exchange Commission Fraud Act. C) Sarbanes-Oxley Act. D) Federal Reserve Act. 8) The Sarbanes-Oxley act applies to: A) all corporations. B) all partnerships. C) all publicly traded companies. D).
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6) Skymaster, Inc. has cash of $33,000; net accounts receivable of $41,000; short-term investments of $15,000 and inventory of $25,000. It also has $30,000 in current liabilities and $50,000 in long-term liabilities. The quick ratio for Skymaster, Inc. is: A) 1.78. B) 2.97. C) 3.30. D) 3.80. 7) Xenon Company has cash of $143,000; net.
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8.4   Questions 1) Expenditures incurred, such as changing the oil and filter on a delivery truck, would be considered ordinary repairs. 2) Replacing an engine on a delivery truck would be considered a betterment. 3) Adding on 30 rooms to an existing hotel would be considered a betterment because the addition added to.
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21) Allied Industries purchased a piece of equipment for $65,000 with an estimated salvage value of $15,000 on January 1. Its estimated life is 5 years. To the nearest dollar, what is the equipment's depreciation using double-declining-balance for year 2? A) $ 26,000 B) $ 20,000 C) $ 15,600 D) $ 12,000 22) Digital Solutions.
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6.4   Questions 1) Audits confirm the validity and reliability of accounting information. 2) Employees conduct external audits of a business. 3) Generally Accepted Auditing Standards are developed by the Securities and Exchange Commission. 4) Certified Public Accountants perform external audits of a company to confirm that the financial statements are fairly presented according to.
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7.5   Questions 1) Accounts Receivable are reported at current market value in the current assets sections of the balance sheet. 2) Accounts receivable may be reported net of Allowance for Doubtful Accounts. 3) Accounts Receivable should be reported at ________ in the ________ section of a company's balance sheet. A) Market value; Long-Term Assets B).
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9.8   Questions 1) Payroll is also called employee compensation and can consist of many parts. 2) Benefits are extra compensation that is paid directly to the employee. 3) Which are generally paid for exceptional performance? A) Salaries B) Wages C) Bonuses D) Commissions 4) Which are generally paid at an hourly rate? A) Salaries B) Wages C) Bonuses D) Commissions 5) Pay stated.
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6) Both the formulas for current ratio and debt ratio use current liabilities in the computation. 7) The interest coverage ratio equals interest expense divided by EBIT. 8) EBIT is also called operating profit. 9) Franklin Industries had total assets of $560,000; total liabilities of $250,000; and total stockholders' equity of $310,000. Franklin.
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11) Bonds that may be retired at a prearranged price are called: A) convertible bonds. B) term bonds. C) secured bonds. D) callable bonds. 12) Bonds that mature all at the same time are: A) serial bonds. B) term bonds. C) secured bonds. D) callable bonds. 13) Bonds that are backed by collateral are: A) unsecured bonds. B) convertible bonds. C) callable bonds. D).
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8.3   Questions 1) Depreciation is a process of valuation of an asset. 2) Depreciation is based upon cost, useful life and salvage value. 3) A fixed asset's useful life may be short due to obsolescence. 4) Straight-line depreciation is calculated by the formula (cost - salvage value) divided by useful life (generally in years). 5).
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11) Stock that is held by stockholders is called: A) issued stock. B) authorized stock. C) outstanding stock. D) open stock. 12) Which of the following business types is largest by number? A) Not-for-profits B) Proprietorships and partnerships C) Corporations D) Government entities 13) Which of the following business types dominates by the amount of business transacted? A) Partnerships B) Proprietorships C) Corporations D).
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1) A corporation is a separate legal entity from its owners. 2) A corporation must incorporate through the local government of any state it chooses. 3) A corporate charter describes the purpose, place of business, and other details of the business being incorporated. 4) A corporation must incorporate in every state in which.
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8.6   Questions 1) The process of allocating the cost of intangible assets to expense is called amortization. 2) Amortization is computed over the useful life of the intangible asset using the double-declining-balance method. 3) Instead of using an accumulated amortization account similar to accumulated depreciation, the expense of amortization is directly credited to.
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6) The allowance method of accounting for bad debts is required by GAAP because of the materiality principle. 7) The contra-account, Allowance for Doubtful Accounts, is credited when journal entries are made for estimates of bad debts. 8) The percent of sales method is the only method allowed by GAAP to estimate.
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11) Streamlined payment procedures now involve the use of electronic data interchange and electronic funds transfer between and among suppliers and merchandisers. 12) Bank reconciliations are an important part of internal control that should be performed daily. 13) In a bank reconciliation, the bank balance and the book balance must be adjusted.
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7.2   Questions 1) Cash is listed first on the balance sheet because it is the least liquid asset. 2) Each cash account is listed separately on the balance sheet. 3) Cash equivalents may include money orders and traveler's checks. 4) Ninety-day U.S. Treasury notes are considered cash equivalents. 5) Cash consists of anything that a.
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7.3   Questions 1) Accounts receivable are more formal and usually longer in terms than notes receivable. 2) Notes receivable generally include a charge for interest. 3) A company may have receivables such as loans to employees and interest receivable. 4) Accounts receivable are classified as current assets. 5) Which of the following would indicate poor.
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11) Another name for a "clean" audit opinion is a(n): A) disclaimer of opinion. B) qualified opinion. C) adverse opinion. D) unqualified opinion. 12) Another name for an "except for" audit opinion is a(n): A) disclaimer of opinion. B) qualified opinion. C) adverse opinion. D) unqualified opinion. 13) Certified public accountants are licensed by the: A) state. B) SEC. C) the college or.
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10.2   Questions 1) Stockholders' equity consists of contributed capital and paid-in capital. 2) Retained earnings represent internally generated capital. 3) A stockholder may have three basic rights. 4) For most companies, preemptive rights are the exception, rather than the rule. 5) Preferred stock is considered a voting "class" of stock. 6) Preferred stockholders generally have the.
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