11. Genuine Parts received a promissory note from a customer on March 1, 2015. The face amount of the note is $8,000; the terms are 90 days and 9% interest. At the maturity date, the customer pays the amount due for the note and interest. What entry is required on the books of Genuine Parts on the maturity date assuming none of the interest had already been recognized?

a. Increase Cash, $8,000, and decrease Notes receivable $8,000

b. Increase Cash, $8,180, increase Interest Revenue, $180, and decrease Notes Receivable, $8,000

c. Increase Cash $8,720, decrease Notes Receivable $8,000, and increase Interest Revenue, $720

d. No entry is required; the customer pays the amount due to the bank

12. A machine with a cost of $100,000 and accumulated depreciation of $80,000 was sold at a loss of $6,000. What amount of cash was received from the sale?

a. $26,000

b. $14,000

c. $20,000

d. $94,000

13. Assets classified as property, plant, and equipment are reported at

a. each assets estimated market value at the balance sheet date.

b. each assets estimated salvage value at the balance sheet date.

c. the estimated depreciable cost at the balance sheet date.

d. each assets original cost less depreciation since acquisition.

14. On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called

a. Accumulated Amortization

b. Accumulated Depreciation

c. Amortization Expense

d. Depreciation Expense 4

15. All of the following are included in the acquisition cost of property, plant, and equipment except:

a. transportation costs

b. taxes on the purchase

c. installation costs

d. maintenance costs

16. Blanket Airlines acquires a new aircraft. It has an estimated life of 15 years and should be used for 15,000 hours of flight. What is the most appropriate method of depreciation to properly match revenues and expenses?

a. Double-declining-balance

b. Revenue expenditure method

c. Straight-line

d. Units-of-production

17. Depreciation is

a. an effort to achieve proper matching of the cost of operating assets.

b. an accumulation of funds to replace the related plant asset.

c. the difference between the original cost and salvage value of an asset.

d. the cash allocated each period to maintain a plant asset.

18. Land is not depreciated because it

a. appreciates in value.

b. does not have an established depreciable life.

c. has a useful life that is limited to the period of time a company is in business.

d. will provide future benefits for a company for an unlimited period of time.

19. If technology changes rapidly, a firm should

a. expense plant asset immediately because of the uncertainty of future benefits.

b. depreciate plant assets over long periods of time. c. consider an accelerated rate of depreciation.

d. use the straight-line method of depreciation as it is the easiest.

20. Research and development costs are a. treated as an expense when incurred.

b. capitalized but not amortized.

c. capitalized and amortized over the periods that will probably benefit from the research and development.

d. included with the cost of the patent resulting from the research and development. 5

21. All of the following are intangible assets except

a. patents

b. goodwill

c. franchises

d. accounts receivable

22. At the end of 2013, Clock Products, Inc. determined that one of its patents was worthless. The patent had a cost of $300,000. The patent had been amortized for 5 years of its estimated 15-year legal life. Which of the following statements is correct?

a. Clock Products must continue to amortize the patent over its remaining 10 years of life.

b. The patent must be reduced to 5/15, or 33.3% of its original cost and amortized over the remaining 10 years

. c. The remaining unamortized cost must be removed from the accounting records and treated as a loss on the income statement.

d. Clock Products must correct its financial statements for the past five years, so that the entire cost is allocated to that five-year period.