Accounting Questions

1.Shop -N-Go Systems purchased cash registers on April 1 for $6,000. If this asset has an estimated useful life of four years, what is the net book value of the cash registers on May 31 if the company uses the straightline method of depreciation?

Select one:

a. $125.

b. $1,500.

c. $6,000.

d. $5,750.

2.Which of the following would not be considered a user of financial information?

Select one:

a. A large pension fund

b. A real estate investor

c. Company management

d. All the above are considered interested in financial information.

3.Assets are listed on the:

Select one:

a. Balance sheet.

b. Income statement.

c. Statement of Retained Earnings.

d. Statement of cash flows.

4.Merchandising companies that are small and do not use a perpetual inventory system may elect to use:

Select one:

a. A physical inventory system

b. A periodic inventory system

c. An inventory shrinkage method

d. An inventory subsidiary ledger system.

5.If total assets equal $180,000 and total liabilities equal $135,000, the total owners' equity must equal:

Select one:

a. $ 315,000.

b. $45,000.

c. Cannot be determined from the information given.

d. Some other amount.

6.The accrual of interest on a note payable will

Select one:

a. Reduce total liabilities.

b. Increase total liabilities.

c. Have no effect upon total liabilities.

d. Will have no effect upon the income statement but will affect the balance sheet.

7.Generally accepted accounting principles

Select one:

a. Are established by the International Accounting Standards Board

b. May change over time

c. Both A & B

d. Neither A nor B

8.Before any month-end adjustments are made, the net income of Russell Company is $66,000. However, the following adjustments are necessary: office supplies used, $2,160; services performed for clients but not yet recorded or collected, $2,640; interest accrued on note payable to bank, $2,040. After adjusting entries are made for the items listed above, Russell Company's net income would be:

Select one:

a. $72,840.

b. $67,560.

c. $64,440.

d. Some other amount.

9.Hefty Company wants to know the effect of different inventory methods on financial statements. The information provided below relates to beginning inventory and purchases for the current year:

January 2Beginning Inventory500 units at $3.00 per unit

April 7Purchased1,100 units at $3.20 per unit

June 30Purchased400 units at $4.00 per unit

December 7 Purchases1,600 units at $4.40 per unit

Sales during the year were 2,700 units at $5.00. If Hefty used the rst-in rst-out method, ending inventory would be:

Select one:

a. $2,780.

b. $3,960.

c. $9,700.

d. $10,880.

10.The allowance for Doubtful Accounts represents:

Select one:

a. Cash set aside to make up for bad debt losses

b. The amount of uncollectible accounts previously written o

c. The difference between the face value of accounts receivable and the net realizable value of the accounts receivable

d. The difference between total credit sales and cash sales