Inventory purchased on account would lead to a credit in which account? _____ Sales Accounts receivable Inventory Accounts payable Inventory sold on account would lead
Inventory purchased on account would lead to a credit in which account? _____
Inventory sold on account would lead to a debit in which account? _____ Manufacturers often have three classes of inventory held on their books. Which of the following is NOT a class of manufacturing inventory? _____ Companies post the cost of inventory onto their accounting books. What cost might they also post with the cost of inventory? _____ | Currency differences from international purchases |
Which of the following is not a cost-flow assumption mentioned in the chapter? _____ Describe which costs under FIFO would be sold and which costs would remain in inventory. _____ | Oldest costs; newest costs |
| Newest costs; oldest costs |
| Newer costs; average costs |
| Average costs; older costs |
Describe which costs under LIFO would be sold and which costs would remain in inventory. _____ | Oldest costs; newest costs |
| Average costs; older costs |
| Newest costs; oldest costs |
| Newer costs; average costs |
Grandma Kate Bakery reported sales revenue of $52,000 and cost of goods sold of $22,000. What is the bakery's gross profit if its ending inventory is understated by $6,000? _____ Joe's Bargain Basement, LLC sells second-hand clothing. Sometimes, Joe will sell his friend's clothing through his storefront. He does so under a basic consignment contract. Who legally owns the consigned goods sold at Joe's store? _____ | No one owns the goods under a consignment contract |
| Joe's Bargain Basement, LLC |
Which cost is not recorded as part of the cost of a building? _____ | Construction materials and labor |
| Real estate commission paid to buy the building |
| Annual building maintenance |
| Concrete for the building's foundation |
Unlimited Airline bought four used Canada Tran airplanes. Each plane was worth $33,000,000, but the owner sold the combination for $124,000,000. How much is Unlimited Airline's cost of each plane? _____ How should you record a capital expenditure? _____ Which method almost always produces the most depreciation in the first year? _____ | All produce the same total depreciation |
Which depreciation method would you generally prefer to use for income tax purposes? Why? _____ | Straight-line because it is simplest |
| Double-declining-balance because it gives the most total depreciation over the asset's life |
| Double-declining-balance because it gives the fastest tax deductions for depreciation |
| Units-of-production because it best tracks the asset's use |
A copy machine costs $45,000 when new and has accumulated depreciation of $44,000. Suppose Print and Photo Center junks this machine, receiving nothing. What is the result of the disposal transaction? _____ Which method is used to compute depletion? _____ | Units-of-production method |
| Double-declining-balance method |
Which intangible asset is recorded only as part of the acquisition of another company? _____ Suppose Print and Photo Center sold the machine it originally purchased at $45,000 for $1,000. Total accumulated depreciation is $44,000. What is the result of this disposal transaction? _____ Rural Tech Support pays $130,000 for a group purchase of land, building, and equipment. At the time of your acquisition, the land has a market value of $70,000, the building $56,000, and the equipment $14,000. The amount Rural will record for the land amount will be: _____
