1 of50

Investments in debt securities, such as bonds, may be classified as either current or long-term assets.

True

False

Question

2 of50

Marketable securities that are held until the due date of the securities are

trading and held-to-maturity securities.

available-for sale securities.

held-to-maturity securities.

trading securities.

Question

3 of50

Which of the following business types is most common as measured by the amount of business transacted?

Government entities

Proprietorships

Partnerships

Corporations

Question

4 of50

Depreciation is based upon cost, useful life, and salvage value.

True

False

Question

5 of50

Because depreciation is not cash-based, it is NOT reported in the direct method of the statement of cash flows.

True

False

Question

6 of50

A company has a petty cash fund of $200. At the end of the month, $6.41 remains in the fund along with $190.96 in various receipts. The journal entry to replenish the fund would show a debit(s) to

various expenses for $190.96 and Cash Short of $2.63.

Cash for $190.96.

Cash for $193.59.

various expenses for $190.96 and Cash Over of $2.63.

Question

7 of50

A 12-month, 8% note dated August 1, 2013 for $5,000 would have accrued interest payable on December 31, 2013 of $166.67.

True

False

Question

8 of50

Warranty expense must be estimated and matched to revenues.

True

False

Question

9 of50

Upgrading the RAM on a computer would be an example of a(n)

capital expense.

betterment.

ordinary repair.

extraordinary repair.

Question

10 of50

The formula for the quick ratio is quick assets divided by noncurrent assets.

True

False

Question

11 of50

Which of the following are considered to be legal entities that exist separate and distinct from their owners?

Sole proprietorships

Organizations with more than 100 partners

Partnerships

Corporations

Question

12 of50

Patents and copyrights can be seen, held, or touched.

True

False

Question

13 of50

Which of the following would be considered part of the cost of machinery and equipment?

Repairs after start-up

Insurance after purchase

Maintenance

Sales taxes

Question

14 of50

The business or person that signs the note and promises to pay the required amount is called the payee.

True

False

Question

15 of50

Conley Company has a petty cash fund of $300. At the end of the month, $42.38 remains in the fund along with $260.75 in various receipts. The journal entry to replenish the fund would be debit

Petty Cash for $257.62 and credit Cash for $257.62.

various expenses, $260.75 and credit Cash for $260.75.

various expenses, $260.75, credit Cash Over for $3.13, and credit Cash for $257.62.

various expenses, $254.49, debit Cash Short for $3.13, and credit Cash for $257.62.

Question

16 of50

Neither land nor land improvements are depreciated.

True

False

Question

17 of50

Using a 365-day year, the maturity value of a 180-day note for $2,700 at 9% annual interest is (rounded to the nearest cent)

$2,819.84.

$2,821.50.

$2,943.00.

$ 119.84.

Question

18 of50

On January 1, Bestway, Inc. signed a $175,000, 8%, 30-year mortgage that requires semiannual payments of $7,735 on June 30 and December 31 of each year. The journal entry to record the second semiannual payment would be (round interest calculation to the nearest dollar) to

debit Interest expense, $764; debit Mortgage payable, $6,971; credit Cash, $7,735.

debit Mortgage payable, $7,735; credit Cash, $7,735.

debit Interest expense, $6,971; debit Mortgage expense, $764; credit Cash, $7,735.

debit Interest expense, $6,971; debit Mortgage payable, $764; credit Cash, $7,735.

Question

19 of50

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 five years. To the nearest dollar, what is the equipment's depreciation using double-declining-balance for year two?

$ 26,000

$ 12,000

$ 20,000

$ 15,600

Question

20 of50

Payroll is also called employee compensation and can consist of many parts.

True

False

Question

21 of50

The number of shares of stock that a corporation is given the right to sell is called

authorized stock.

issued stock.

outstanding stock.

capital stock.

Question

22 of50

Which of the following would NOT be considered part of the cost of machinery and equipment?

In-transit insurance costs

Delivery charges

Installation costs

Repairs and maintenance after start-up

Question

23 of50

Equipment costing $118,000 has accumulated depreciation of $92,000. The equipment is a trade-in for new equipment costing $187,000. If the trade-in value received for the old equipment is $30,000, the journal entry to record this transaction is to

debit Equipment (New) for $187,000, debit Accumulated Depreciation Equipment for $92,000, credit Equipment (Old) for $118,000, and credit Cash for $161,000.

debit Equipment (New) for $187,000 and credit Cash for $187,000.

debit Accumulated Depreciation Truck for $50,000, debit Loss on Disposal $6,000, and credit Truck for $56,000.

debit Equipment (New) for $187,000, debit Accumulated Depreciation Equipment for $92,000, debit Loss on Exchange of Assets for $26,000, credit Equipment (Old) for $118,000 and credit Cash for $187,000.

Question

24 of50

Liberty Company has declared a $40,000 cash dividend to shareholders. The company has 5,000 shares of $20-par, 6% preferred stock and 10,000 shares of $15-par common stock. The preferred stock is cumulative. How much will be distributed to the preferred and common stockholders on the date of payment if the preferred stock is $12,000 in arrears?

$18,000 preferred, $22,000 common

$20,000 preferred, $20,000 common

$6,000 preferred, $34,000 common

$40,000 preferred, $0 common

Question

25 of50

In accounting, what is the meaning ofcapitalized?

Capitalized means that a given city has been selected as a government center.

Capitalized means that the cost of an asset is recorded as a debit (increase) to expense.

Capitalized means that a liability account is credited (increase

Capitalized means that an asset account is debited (increased) for the cost of an asset.

Question

26 of50

Interest is an expense to the debtor and income to the creditor.

True

False

Question

27 of50

Cash consists of anything that a bank will take as a deposit.

True

False

Question

28 of50

The cost of long-term assets must be allocated to an expense as the asset is used up.

True

False

Question

29 of50

The process of acquiring merchandise from a supplier begins with the

purchase order.

check for payment.

receiving report.

invoice.

Question

30 of50

Appleway Corporation purchases a machine for $125,000. It has an estimated salvage value of $10,000 and is expected to produce 50,000 units in its lifetime. During the first year of operation, it produced 14,500 units. To the nearest dollar, the depreciation for the first year under the units of production method will be

$35,500.

$31,250.

$36,250.

$33,350.

Question

31 of50

Book value is depreciable cost minus accumulated depreciation.

True

False

Question

32 of50

The records of Inland Equipment showed a net loss of $30,000, depreciation expense of $25,000, and an increase in supplies on hand of $5,000. The amount of net cash flow from operating activities using the indirect method is

($10,000).

$15,000.

$20,000.

($15,000).

Question

33 of50

Retained earnings represent internally generated capital.

True

False

Question

34 of50

A company issues 15,000 shares of its $25 par common stock for $29 per share. The amount to be debited to Cash is

$435,000.

$375,000.

$405,000.

$ 60,000.

Question

35 of50

On September 1, 2012, Juno Corp. lent $2,400 to Bill Askins on a six-month 8% promissory note. The journal entry to record the note for Juno Corp. would be to:

debit Note Receivable/Tim, $2,400; credit Cash, $2,400.

debit Note Receivable/Tim, $96; credit Interest Income, $96.

debit Note Receivable/Tim, $2,496; credit Cash, $2,496.

debit Cash, $2,400; credit Note Payable/Tim, $2,400.

Question

36 of50

Separation of duties is essential for internal control over cash receipts and cash payments.

True

False

Question

37 of50

Which of the following would indicate poor internal control over accounts receivable?

The same person handling cash receipts also records the accounts receivable transactions.

The person handling cash receipts passes the receipts to someone who enters them into accounts receivable.

The mailroom employees open the mail and give the cash receipts to another employee.

The person who handles accounts receivable would not write off accounts as uncollectible.

Question

38 of50

Limited liability means that the stockholders of a corporation share a personal liability for all debts of the corporation.

True

False

Question

39 of50

Accumulated depletion is a(n)

contra-asset account.

cash account.

contra-liability account.

expense account.

Question

40 of50

Allied Industries reported net income of $52,000, depreciation expenses of $13,000, a gain on a land sale of $3,000, and a decrease in accounts receivable of $1,500. Under the indirect method, net cash flows from operations is

$63,500.

$66,500.

$69,500.

$60,555.

Question

41 of50

The portion of stockholders' equity that can be used for dividends is referred to as legal capital.

True

False

Question

42 of50

Franklin Industries had total assets of $560,000; total liabilities of $250,000; and total stockholders' equity of $310,000. Franklin Industries debt ratio is

55.4%.

28.7%.

44.6%.

80.6%.

Question

43 of50

Financial analysis is used to predict the future of a business.

True

False

Question

44 of50

Online banking should NOT be used to reconcile the bank account.

True

False

Question

45 of50

Costs of testing machinery or equipment before they are used would be included in the price of the machinery or the equipment.

True

False

Question

46 of50

There are two methods for accounting for uncollectible receivables.

True

False

Question

47 of50

Assets that are NOT expected to provide benefits for a number of accounting periods are called

current assets.

property, plant, and equipment.

long-term assets.

natural resources.

Question

48 of50

The allowance method of accounting for bad debts is required by GAAP because of the materiality principle.

True

False

Question

49 of50

A stock dividend affects total stockholders' equity.

True

False

Question

50 of50

Realized gains and losses only occur when the security is sold for more or less than the original cost.

True

False