I'm NOT just looking for answers (ie. A, B, C, etc). I want to understand the material as best as possible, so please give an explanation for each question and answer. I'll give ya a big thumbs up. Thank you!

Questions:

(1). Which of the following best explains the meaning of stockholders" equity?

	A.	The amount of common stock less dividends of the life of the company
	B.	Total assets plus total liabilities of the company
	C.	The difference between total revenues and total expenses, less dividends for the year
	D.	The amount of capital invested by stockholders plus profits retained over the life of the company
	E.	All revenues, expenses, and dividends over the life of the company

(2). When preparing a bank reconciliation, a deposit outstanding would be _______ while a check outstanding would be ________:

	A.	Excluded from all reconciliation as this is a non-cash transaction.
	B.	Subtracted from the bank"s cash balance; Added to the bank"s cash balance.
	C.	Subtracted from the company"s cash balance; Added to the company"s cash balance.
	D.	Added to the bank"s cash balance; Subtracted from the bank"s cash balance.
	E.	Added to the company"s cash balance; Subtracted from the company"s cash balance.

(3). Crouch Company purchased a delivery truck on January 1, 2012, for $65,000. The truck has an estimated life of 10 years and an estimated residual value of $5,000. If Crouch Co. uses straight-line depreciation, what would be the book value after 4 years?

	A.	$41,000
	B.	$36,000
	C.	$60,000
	D.	$24,000
	E.	None of the Above

(4). Leinart Co. had the following inventory transactions for the period. Calculate the balance of ending inventory using the LIFO cost flow assumption.

Date		Quantity	Purchase Cost	Selling Price
July 1	Beginning Inventory	350	$1
July 10	Sale	150		$5
July 14	Purchase	400	2
July 17	Sale	300		6
July 28	Purchase	200	4

	A.	$1,400
	B.	$550
	C.	$1,200
	D.	$1,000
	E.	$650

(5). Net Sales Revenue includes Total Sales Revenue less:

	A.	Sales Returns and Allowances
	B.	Total liabilities
	C.	Total expenses
	D.	Depreciation Expense
	E.	Bad Debt Expense

(6). Tony estimates that 5% of all inventory units sold will result in warranty work. If Tony sells 200 units for the current year and estimates the average future warranty repair to cost $100 per unit, what amount of Warranty Expense is recorded for the current year?

	A.	$800
	B.	$2,000
	C.	$200
	D.	$0
	E.	$1,000

(7). Lower-of-cost-or-market inventory accounting is an example of:

	A.	Historical cost principle
	B.	Cost accounting
	C.	Fair value accounting
	D.	Revenue recognition principle
	E.	Conservatism

(8). How many of the following transactions would be capitalized? a. Purchase building by signing a long-term note b. Purchase three-year insurance policy in advance c. Pay dividends to stockholders d. Pay utilities for operating a building

	A.	0
	B.	1
	C.	3
	D.	2
	E.	4

(9). Vikings Inc. reports the following amounts: How much goodwill would be recorded if Torretta Holdings purchases Vikings for $635,000?

	Book Value	Fair Value
Assets	$400,000	$500,000
Liabilities	$45,000	$45,000
Net income	$25,000

	A.	$180,000
	B.	$280,000
	C.	$255,000
	D.	$100,000
	E.	$155,000

(10). On July 31, 2012, Smith Co. borrows from RavenBank by signing a note for $80,000. This transaction would be recorded by Smith Co. with a credit to:

	A.	Interest Expense
	B.	Notes Payable
	C.	Cash
	D.	Accounts Payable
	E.	Loan Revenue

(11). On October 1, 2012, Ingram Inc. borrows $50,000 from the bank by signing a 9-month note payable at 6% interest. The adjusting entry on December 31, 2012, includes a debit to Interest Expense for::

	A.	$3,000
	B.	$750
	C.	$2,250
	D.	$1,500
	E.	$0

(12). Consider the following transactions: 1. The company uses supplies purchased in the previous period, $1,500. 2. The company pays cash for inventory, $6,000. 3. The company repays a loan to the bank, $10,000 (ignore any interest cost). The amount of accrual-basis expense is _____ while the amount of cash-basis expense is _____.

	A.	$1,500; $6,000
	B.	$6,000; $16,000
	C.	$7,500; $17,500
	D.	$6,000; 11,500
	E.	$1,500; 16,000

(13). When paying for services in advance, which of the following would be recorded using cash-basis accounting on the day the services are received?

	A.	Debit to Prepaid Services
	B.	Debit to Service Expense
	C.	Credit Cash
	D.	Credit to Prepaid Services
	E.	None of the above

(14). How many of the following would decrease net income? a. Estimated future uncollectible accounts receivable b. Probable future warranty costs c. Estimated selling price of inventory falling below its original cost d. Impairment of an asset e. Actual bad debt

	A.	1
	B.	2
	C.	4
	D.	3
	E.	5

(15). The adjusting entry to estimate future bad debts includes a:

	A.	Debit to Sales Revenue
	B.	Credit to Accounts Receivable
	C.	Credit to Allowance for Uncollectible Accounts
	D.	Debit to Accounts Receivable
	E.	Two of the above are correct

(16). Which of the following statements accurately describes depreciation?

	A.	Depreciation is used to track the fair value of the asset
	B.	Depreciation is used to allocate the cost of the asset over periods benefited
	C.	The book value of an asset is its original cost less accumulated depreciation
	D.	Two of the above are correct
	E.	All of the above are correct

(17). A trade discount results in:

	A.	Additional bad debt expense
	B.	Revenue being recorded for the discounted price
	C.	A contra asset being recorded
	D.	Customers delaying cash payment
	E.	A contra revenue account being recorded