1. Bank errors A) occur because of time lags. RED B) are infrequent in occurrence. must be corrected by debits. C) D) are corrected by making an adjusting entry on the depositor's books. 2. Which of the following represents the largest number of common shares? A) Issued shares B) Outstanding shares E) Authorized shares D) Treasury shares 3. Syfy Company on July 15 sells merchandise on account to Eureka Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co. for the balance due. What is the amount of cash received? A) $2,900 B) $3,000 C) $2,940 D) $5,000 4. A factory machine was purchased for $375,000 on January 1, 2015. It was estimated that it would have a $75,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be ru 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2015. If the company us the units-of-activity method of depreciation, the amount of depreciation expense for 2015 would be A) $30,000. B) $75,000. C) $37,500. D) $60,000. 5. Treasury stock should be reported in the financial statements of a corporation as a(n) A) investment. B) liability. C) deduction from total paid-in capital and retained earnings. D) deduction from total paid-in capital. 6. A company sells a plant asset which originally cost $360,000 for $120,000 on December 31, 2015. The Accumulated Depreciation account had a balance of $144,000 after the current year's depreciation of $ had been recorded. The company should recognize a A) $60,000 loss on disposal. B) $96,000 loss on disposal. C) $240,000 loss on disposal. D) $96,000 gain on disposal. " hiary 1, 2015, Carter Corporation issued $5.000,000, 10-year, 8% bonds for $5,100,000 of ca payable semiannually on January I and July 1. The journal entry to record this transaction on Janary A) Premium on Bonds Payable 100,000 5,000,000 Cash 5,100,000 Bonds Payable 5,100,000 B) Cash 5,000,000 100,000 Bonds Payable Premium on Bonds Payable C) Cash 5,100,000 Bonds Payable 5,100,000 D) Cash 5,000,000 Bonds Payable 5,000,000 8. A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated that the equipm have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method of dep the amount to be recorded as depreciation expense at December 31, 2015 is A) $12,000. B) $10,500. C) $16,000. D) $14,000. 9. If bonds are issued at a discount, it means that the A) market interest rate is higher than the contractual interest rate. B) financial strength of the issuer is suspect. C) market interest rate is lower than the contractual interest rate. D) bondholder will receive effectively less interest than the contractual interest rate. 10. Allowance for Doubtful Accounts on the balance sheet A) appears under the heading "Other Assets." B) increases the cash realizable value of accounts receivable. C) is offset against total current assets. D) is offset against accounts receivable. 11. The following data is available for Blaine Corporation at December 31, 2015: Common stock, par $10 (authorized 30,000 shares) Treasury Stock (at cost $15 per share) Based on the data, how many shares of common stock have been issued? A) 30,000 B) 24,940 C) 29,940 D) 25,000 $250,000 $ 900 2. A current liability is a debt that can reasonably be expected to be paid A) out of currently recognized revenues. B) out of cash currently on hand. C) between 6 months and 18 month: D) within one year or the operating cycle, whichever is longer
