1.The accounts receivable turnover represents

a. the average number of times the accounts receivable accounts are collected in a year.

b. the average number of days between the credit sale and collection from the customer.

c. the average number of days to qualify for the discount on a credit sale.

d. the average number of days from the date of the sale to the date the account is due.

2. Convertible bonds can be exchanged, at the option of the bondholder, for

a. shares of preferred stock.

b. shares of common stock.

c. non-convertible bonds.

d. non-interest bearing notes.

3. If the market rate of interest is 7% and the contractual rate of interest is 6.5%, bonds

will sell

a. at a premium.

b. at face value.

c. at a discount.

d. only after the contractual rate of interest is increased.

4. If the risk of loss related to a contingent liability is probable and the amount of the loss can be

reasonably estimated, the contingent liability

a. should be recorded in the accounts.

b. should be disclosed in the notes accompanying the financial statements.

c. should not be recorded or disclosed in the notes until the contingency actually happens.

d. must be paid for the amount estimated.

5. Mann Company sells 6,000 units of its product in 2019 for $500 each. The selling

price includes a one-year warranty on parts. It is expected that 3% of the units will be

defective and that repair costs will average $50 per unit. What amount should

Mann Company report as Warranty Expense in its 2019 income statement?

a. $9,000.

b. $6,000.

c. $3,000.

d. $15,000.

6. A company purchased land for $70,000 cash. In addition, the company paid a real estate brokers commission of $5,000, $7,000 was spent for demolishing an old building on the land, and $10,000 was spent on paving the new parking lot. The cost of the land should be recorded at

a. $75,000.

b. $70,000.

c. $92,000.

d. $82,000.

Use the following information to answer questions 7 and 8:

The following totals for the month of May were taken from the payroll register of Reddy Company:

Salaries $12,000

Social Security and Medicare taxes withheld 750

Income taxes withheld 2,500

Union dues withheld 250

Salaries subject to federal and state

unemployment taxes of 6.2% 4,000

7.The general journal entry to record the monthly payroll on May 31 would include a

a. debit to Salaries Expense for $12,000.

b. credit to Salaries Payable for $12,000.

c. debit to Salaries Payable for $12,000.

d. debit to Salaries Expense for $8,500.

8. The amount of the net pay would be

a. $8,750.

b. $8,500.

c. $9,250.

d. $4,000.