Inventory purchased on account would lead to a credit in which account? _____

Sales

Accounts receivable

Inventory

Accounts payable

Inventory sold on account would lead to a debit in which account? _____

Inventory

Accounts receivable

Accounts payable

Sales

Manufacturers often have three classes of inventory held on their books. Which of the following is NOT a class of manufacturing inventory? _____

Work-in-process

Sold inventory

Raw materials

Finished goods

Companies post the cost of inventory onto their accounting books. What cost might they also post with the cost of inventory? _____

Sales commission paid

Interest charges

Currency differences from international purchases

Shipping costs

Which of the following is not a cost-flow assumption mentioned in the chapter? _____

Sum-of-days

LIFO

Average cost

FIFO

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? _____

$27,000

$30,000

$24,000

$36,000

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? _____

Joe's friend

Joe

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? _____

$132,000,000

$124,000,000

$31,000,000

$33,000,000

How should you record a capital expenditure? _____

Debit an asset

Debit an expense

Debit a liability

Debit capital

Which method almost always produces the most depreciation in the first year? _____

Units-of-production

All produce the same total depreciation

Straight-line

Double-declining-balance

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? _____

No gain or loss

Loss of $45,000

Gain of $1,000

Loss of $1,000

Which method is used to compute depletion? _____

Units-of-production method

Double-declining-balance method

Depletion method

Straight-line method

Which intangible asset is recorded only as part of the acquisition of another company? _____

Goodwill

Patent

Franchise

Copyright

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? _____

Gain of $1,000

No gain or loss

Loss of $1,000

Loss of $44,000

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: _____

$75,000

$52,000

$130,000

$65,000