1. After posting the second closing entry to the income summary account, the balance will be equal to

Answer

	a.	zero
	b.	revenues for the period
	c.	retained earnings
	d.	the net income or (loss) for the period

Question 2

1.

All of the following below are needed for the calculation of straight-line depreciation except

Answer

	a.	units produced
	b.	residual value
	c.	estimated life
	d.	cost

Question 3

1.

On which financial statement will Income Summary be shown?

Answer

	a.	retained earnings statement
	b.	balance sheet
	c.	income statement
	d.	none of these

Question 4

1.

All companies must use a calendar year as their fiscal year.

Answer True False

Question 5

1.

A company has merchandise inventory costing $175 on hand at the beginning of the year. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is

Answer

	a.	$970
	b.	$300
	c.	$650
	d.	$620

Question 6

1.

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

Answer

	a.	deferral
	b.	depletion
	c.	amortization
	d.	depreciation

Question 7

1.

The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is

Answer

	a.	debit Cash, credit Premium on Bonds Payable and Bonds Payable
	b.	debit Bonds Payable, credit Cash
	c.	debit Cash, credit Bonds Payable
	d.	debit Cash and Discount on Bonds Payable, credit Bonds Payable

Question 8

1.

Fixed assets are ordinarily presented in the balance sheet

Answer

	a.	at current market values
	b.	at replacement costs
	c.	in a separate section along with intangible assets
	d.	at cost less accumulated depreciation

Question 9

1.

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount

Answer

	a.	that cannot be determined.
	b.	less than face value.
	c.	greater than face value.
	d.	equal to the face value.

Question 10

1.

The specific identification inventory method should be used when the inventory consists of identical, low cost units that are purchased and sold frequently.

Answer

True False

Question 11

1.

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years. Determine the 2nd years depreciation using straight-line depreciation.

Answer

	a.	$13,000
	b.	$12,400
	c.	$24,800
	d.	$26,000

Question 12

1.

If bonds are issued at a discount, it means that the

Answer

	a.	market interest rate is lower than the contractual interest rate.
	b.	financial strength of the issuer is suspect.
	c.	market interest rate is higher than the contractual interest rate.
	d.	bondholder will receive effectively less interest than the contractual rate of interest.

Question 13

1.

Bonds with a face amount $1,000,000, are sold at 98. The entry to record the issuance is

Answer

	a.	Cash 980,000 Bonds Payable 980,000
	b.	Cash 980,000 Discount on Bonds Payable 20,000 Bonds Payable 1,000,000
	c.	Cash 980,000 Premium on Bonds Payable 20,000 Bonds Payable 1,000,000
	d.	Cash 1,000,000 Premium on Bonds Payable 20,000 Bonds Payable 980,000

Question 14

1.

For accounting purposes, stated value is treated the same way as par value.

Answer True False

Question 15

1.

Which of the following is not an asset?

Answer

	a.	inventory
	b.	owners equity
	c.	cash
	d.	investments