23. Your professor is planning on a cruise for his 70^th birthday. He wants to know how much to put aside each month at the beginning of the month at 6% interest so that the balance is $4800 at the end of the five years. What table should be used?

A) Future value of ordinary annuity.

B) Future value of annuity due.

C) Future value of 1.

D) Present value of annuity due.

24. The hardware store had sales of $600,000 and began the year with a liability of $32,000 for the estimated refunds. The estimate of returns is at 6% of sales. Actual returns was $28,000. What will be the income statement amount for net sales assuming no credit sales were made?

A) 600,000

B) 564,000

C) 568,000

D) 604,000

25. You really should report accounts receivable at

A) PV of cash receipts.

B) Current value with accrued interest.

C) Expected amount to be received.

D) Current value less collection costs.

26. Collection on accounts written off result in an increase in cash (DA) and the following:

A) Net Increase in accounts receivable.

B) Increase in bad debt expense.

C) Decrease in bad debt expense.

D) Adjustment to the allowance account.

27. The medical company shows inventory using lower of cost or market rules. For one item the following is given:

Selling price is $340. Cost is $250. And costs to sell are $25. Then, what would the company show on the balance sheet for this item (of course, would multiply by the number on hand)?

A) 315.

B) 340.

C) 225.

D) 250.

28. A company built a warehouse for its operations. In the year of construction, the company had interest on a loan of $30,000 and interest on a construction loan for the warehouse of $60,000. The interest computed on average accumulated expenditures was $50,000. What is the amount of interest expense the company should show on the financial statements?

A) 30,000

B) 40,000

C) 90,000

D) 140,000

29. Research and development costs:

A) Generally pertain to activities that occur prior to the start of production.

B) May be expensed or capitalized, at the option of the reporting entity.

C) Must be capitalized and amortized.

D) None of these are correct.

30. In accounting for oil and gas exploration costs, companies:

A) May not use the full cost method.

B) May use the successful efforts method.

C) May use the slippery slope method.

D) All of these are correct.

31. On January 1, a company started making machines to use in its operations. These machines are very specific and can be used in operations for this company only. The relevant expenditure information is given below:

Jan 1: 300,000

Sept 1: 450,000

Dec 31: 450.000

The interest rate is 12% on 5 million in bonds held by the company. That is the only debt for the company.

What is the capitalized interest for the year?

A) 72,000

B) 63,000

C) 54,000

D) 36,00

32. Software development costs are capitalized if they are incurred:

A) Prior to the point at which technological feasibility has been established.

B) After commercial production has begun.

C) After technological feasibility has been established but prior to the product availability date.

D) None of these are right.

33. Under IFRS, development expenditures are:

A) Expensed in the period incurred.

B) Expensed in the period they are determined to be unsuccessful.

C) Capitalized sometimes.

D) All of these are right.

34. A company buys equipment with installation costs included for $72,000. The expected life for the machine is five years and the residual is 6000. If the company uses straight line for the first year of operations, what is the book value at the end of the first year?

A) 57,600

B) 51,600

C) 58,800

D) 52,800