1. A new machine with a purchase price of $94,000, transportation costs of $8,000, installation costs of $6,000, and sales tax of $2,000, would have a cost basis of
2. $ 96,000
3. $102,000
4. $108,000
5. $110,000

2.5 points

QUESTION 2

1. Which of the following payrolltaxes are paid by the employee?
2. SUTA taxes
3. FUTA taxes
4. Federalwithholding
5. all of the above

2.5 points

QUESTION 3

1. Which of the following should not be included in the initial cost of a piece of equipment?
2. installation costs
3. Repairs to the machine for damage incurred during delivery
4. freight costs
5. testing costs before putting the equipment into use

2.5 points

QUESTION 4

1. Which of the following is included in the cost of land?
2. past due real estate taxes paid by the buyer
3. fences on the land
4. outdoor lighting for a parking lot
5. cost of paving a parking lot

2.5 points

QUESTION 5

1. Monster Co. issued a $65,000, 120-day, discounted note to Cannibal Bank. The discount rate is 12%. What is the maturity value of the note?
2. $72,800
3. $67,600
4. $62,400
5. $65,000

2.5 points

QUESTION 6

1. On December 31, Bonds Batting Company has decided to sell one of its batting cages. The initial cost of the equipment was $235,000 with an accumulated depreciation of $195,000. Depreciation has been taken up to the end of the year. The company found a buyer that is willing to purchase the equipment for $10,000. What is the amount of the gain or loss on this transaction?
2. Cannot be determined
3. No gain or loss
4. Loss of $30,000
5. Gain of $10,000

2.5 points

QUESTION 7

1. Bright Co. holds Park Co.'s $20,000, 150 day, 6% note. The entry made byPark Co. (the borrower) when the note is repaid is (use a 360 day year):
2. Cash20,500Note payable20,000Interest expense500Notes Payable20,000Cash20,000Notes Payable20,000InterestExpense500Accounts Payable20,500Note Payable20,000Interest Expense500Cash20,500

2.5 points

QUESTION 8

1. A retirement plan which requires the employer to make specific annual retirement contributions, with no promise to employees regarding future retirement payments, is termed
2. funded
3. unfunded
4. defined contribution
5. defined benefit

2.5 points

QUESTION 9

1. Fixed assets are ordinarily presented in the balance sheet
2. at replacement costs
3. at current market values
4. before current assets
5. at cost less accumulated depreciation

2.5 points

QUESTION 10

1. The process of allocating the cost of natural resources such as metal ores and coal to an expense account is called
2. amortization
3. depletion
4. depreciation
5. deferral

2.5 points

QUESTION 11

1. The costof a fixed asset account minus the related accumulated depreciation account is referred to as
2. contra asset
3. market value
4. book value
5. historical cost

2.5 points

QUESTION 12

1. A retirement plan which promises employees a specific annual benefit upon retirement, based on years of service and compensation, is called a(n)
2. funded plan
3. defined benefit plan
4. defined contribution plan
5. unfunded plan

2.5 points

QUESTION 13

1. The term that refers to the allocation ofthe cost of an intangible asset to expense because of the decline in its usefulness is
2. allocation
3. amortization
4. depreciation
5. depletion

2.5 points

QUESTION 14

1. The maturity value of a$50,000,90-day,5%note payable is(use a 360 day year)
2. $625
3. $2,500
4. $52,500
5. $50,625

2.5 points

QUESTION 15

1. An employee receives an hourly rate of $25, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 45; federal income tax withheld, $350; cumulative earnings for the year prior to the current week, $99,700; social security tax rate, 6.0% on a maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the gross pay for the employee?
2. $752.50
3. $1,187.50
4. $775.00
5. $1,125.00

2.5 points

QUESTION 16

1. Solare Company purchased a diamond mine for $65,000,000. The diamond deposit is estimated to hold 6,000,000 tons and has a salvage value of $5,000,000. During the current year, 2,300,000 tons of diamonds were mined and sold.
2. What is depletion expense for the current year?
3. $874,000
4. $230,000
5. $24,909,000
6. $23,000,000

2.5 points

QUESTION 17

1. Solare Company purchased a diamond mine for $65,000,000. The diamond deposit is estimated to hold 6,000,000 tons andn has a saalvage value of $5,000,000. During the current year, 2,300,000 tons of diamonds were mined and sold.
2. What is the depletion rate per ton?
3. $100
4. $26.09
5. $10.83
6. $10

2.5 points

QUESTION 18

1. A machine costing $25,000 with a 5-year life and $5,000 residual value was purchased January 2. Compute depreciation for the first year using the declining-balance method at twice the straight-line rate (double-declining balance).
2. $10,000
3. $9,000
4. $20,000
5. $18,000

2.5 points

QUESTION 19

1. Falcon Company purchased land to construct a new warehouse, paying $30,000 and giving a long-term note for $370,000. Legal fees paid were $11,000, delinquent taxes assumed were $17,000, and fees paid to remove an old building from the land were $16,500. Materials salvaged from the demolition of the building were sold for $4,500. A contractor was paid $1,000,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet .
2. $437,000
3. $440,000
4. $446,000
5. $442,000

2.5 points

QUESTION 20

1. Computer equipment was acquired at the beginning of the year at a cost of $56,000.It hasan estimated residual value of $6,000 and an estimated useful life of 4 years. Determine the 2ndyear's depreciation expense using straight-line depreciation.
2. $10,600
3. $11,200
4. $10,000
5. $12,500

2.5 points

QUESTION 21

1. A possible future obligation that will become a liability only if certain events occur in the future is
2. a contingent liability
3. a discounted liability
4. an accrued liability
5. a deferred liability

2.5 points

QUESTION 22

1. A current liability is a debt that can reasonably expected to be repaid
2. out of currently recognized revenues.
3. out of cash currently on hand.
4. between 6 months and 18 months.
5. within one year.

2.5 points

QUESTION 23

1. Which of the following would not be considered an intangible asset?
2. A copyright
3. Trademark
4. Goodwill
5. A mineral deposit
6. A patent

2.5 points

QUESTION 24

1. The current maturities of long-term debt
2. should be paid immediately.
3. represent the amount of principal payments that are due in the next year.
4. should be reported as a long-term liability.
5. should not be separated from the long-term portion of debt.

2.5 points

QUESTION 25

1. The cost of a product warranty should be recorded as an expense in the
2. same period that the product is sold
3. period the cash is collected for a product sold on account
4. future period when the cost of repairing the product is paid
5. future period when the product is repaired or replaced

2.5 points

QUESTION 26

1. Which of the following would most likely be classified as a current liability?
2. Bonds payable.
3. Mortgage payable.
4. Wages payable
5. Two-year notes payable.

2.5 points

QUESTION 27

1. The interest deducted in advance from the face amount of a note is called
2. the proceeds
3. the face value
4. a discount
5. the maturity value

2.5 points

QUESTION 28

1. In order for a contingent liability to be recorded in the general ledger it must meet which two criteria
2. It is probable and material
3. It is probable and cannot be estimated
4. It is probable and can be estimated
5. It is possible and can be estimated

2.5 points

QUESTION 29

1. Which of the following is not an example of a contingent liability.
2. Accounts payable
3. Product warranties
4. Potential litigation losses
5. Guarantee of another entities' debt
6. Environmental liabilities

2.5 points

QUESTION 30

1. From which retirement plan are the benefits that are paid to retirees tax free?
2. defined contribution plan
3. 401(k) plan
4. defined benefit plan
5. Roth IRA

2.5 points

QUESTION 31

1. Which of the following is not a natural resource?
2. mineral deposit
3. diamonds
4. oil & gas reserves
5. water reservoir
6. patent

2.5 points

QUESTION 32

1. Which of the following is an example of a capital expenditure and added to the cost of an asset rather than a revenue expenditure which is recorded as an expense immediately?
2. replacing all burned-out light bulbs in the factory
3. cleaning the carpet in the front office
4. replacing an engine in factory equipment
5. routine tune-up for a company car

2.5 points

QUESTION 33

1. The balance in the Accumulated Depreciation account represents the
2. Cash fund to be used to replace plant assets.
3. Total amount recorded as expense since the fixed asset was acquired.
4. Amount to be added to the cost of the plant asset to arrive at its fair market value.
5. Amount recorded as depreciationexpense in the current period.

2.5 points

QUESTION 34

1. Which of the following does not decline in service potential over the course of its useful life and therefore is not depreciated?
2. Equipment
3. Fixtures
4. Land
5. Furnishings

2.5 points

QUESTION 35

1. In computing depreciation, residual value is
2. Ignored in all the depreciation methods.
3. Subtracted from accumulated depreciation to determine the asset's depreciable cost.
4. The fair market value of a plant asset on the date of purchase.
5. An estimate of a plant asset's value at the end of its useful life.

2.5 points

QUESTION 36

1. A characteristic of a fixed asset is that it is
2. intangible
3. held for sale in the ordinary course of the business
4. used in the operations of a business
5. a short term investment

2.5 points

QUESTION 37

1. An office employee is paid $15 an hour, with time and a half for all hours worked in excess of 40 during the week. This is his first paycheck of the year. Payroll data for the current week are as follows:
2. Hours worked - 44
3. Federal income tax withheld - $120
4. FICA tax rate - 6.50%
5. Medicare tax rate - 1.5%
6. Federal Unemployment tax rate - .8% of the first $7,000
7. State Unemployment tax rate - 5% of the first $9,000
8. How much is the employee's gross pay?
9. $600
10. $810
11. $690
12. $660

2.5 points

QUESTION 38

1. An office employee is paid $15 an hour, with time and a half for all hours worked in excess of 40 during the week. This is his first paycheck of the year. Payroll data for the current week are as follows:
2. Hours worked - 44
3. Federal income tax withheld - $120
4. FICA tax rate - 6.50%
5. Medicare tax rate - 1.5%
6. Federal Unemployment tax rate - .8% of the first $7,000
7. State Unemployment tax rate - 5% of the first $9,000
8. How much is the employee's net pay?
9. $487.20
10. $474.78
11. $594.78
12. $514.80

2.5 points

QUESTION 39

1. An office employee is paid $15 an hour, with time and a half for all hours worked in excess of 40 during the week. This is his first paycheck of the year. Payroll data for the current week are as follows:
2. Hours worked - 44
3. Federal income tax withheld - $120
4. FICA tax rate - 6.50%
5. Medicare tax rate - 1.5%
6. Federal Unemployment tax rate - .8% of the first $7,000
7. State Unemployment tax rate - 5% of the first $9,000
8. How much is the employer's payroll tax expense for this employee?
9. $175.20
10. $91.08
11. $211.08
12. $95.22

2.5 points

QUESTION 40

1. A machine with a cost of $65,000 has an estimated residual value of $3,000 and an estimated life of 5 years or 15,000 hours. It is depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?
2. $20,000
3. $20,667
4. $12,000
5. $8,000

2.5 points

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