1: Cash equivalents include each of the following except

a. Bank certificates of deposit.

b. Money market funds.

c. Petty cash.

d. U.S. Treasury bills.

2: Flip Company is building a new plant that will take three years to construct. The construction will be financed in part by funds borrowed during the construction period. There are significant architect fees, excavation fees, and building permit fees. Which of the following statements is true?

a. Excavation fees are capitalized but building permit fees are not.

b. Architect fees are capitalized but building permit fees are not.

c. Interest is capitalized during the construction as part of the cost of the building.

d. The capitalized cost is equal to the contract price to build the plant less any interest on borrowed funds.

3: Depreciation is the process of allocating the cost of a plant asset over its service life in

a. An equal and equitable manner.

b. An accelerated and accurate manner.

c. A systematic and rational manner.

d. A conservative market-based manner.

4: Sales taxes collected by a retailer are expenses

a. Of the retailer.

b. Of the customers.

c. Of the government.

d. That are not recognized by the retailer until they are submitted to the government.

5: Flip’s Market recorded the following events involving a recent purchase of merchandise:

Received goods for $50,000, terms 2/10, n/30.

Returned $1,000 of the shipment for credit.

Paid $250 freight on the shipment.

Paid the invoice within the discount period.

As a result of these events, the company’s inventory increased by

a. $48,020.

b. $48,265.

c. $48,270.

d. $49,250.