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1. When a firm receives a plant asset as a donation, what account should be credited?

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Multiple Choice

• Liability
• Revenue
• Contributed capital
• Deferred credit
• Income

2. What effect does the write-off of an account receivable have on the Statement of Cash Flows?

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Multiple Choice

• A decrease to operating cash flows under the indirect method.
• There is no effect.
• A decrease in financing cash flows.
• A decrease in operating cash flows under the direct method.
• 4. Which of the following behaviours is NOT unethical?

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  Multiple Choice

• Selectively assigning costs to inventory.
• Delaying the write-down of obsolete inventories due to competitive pressures.
• Changing a company's accounting policy to match that of its competitors for comparative purposes.
• Recording false sales and purchases.

5. Choose the best description of depreciable cost.

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Multiple Choice

• Original cost less salvage value
• Book value
• Minimum book value
• Salvage value

6. Which of the following amortization methods produces the highest amortization expense in the first year of life of an asset that cost $10,000, has an estimated useful life of four years, and an estimated residual value of $1,500?

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Multiple Choice

• Productive output (with increasing output levels)
• Sum-of-the-years'-digits
• Declining balance
• Straight-line