Question 1 Which of the following below is an example of a capital expenditure and would be capitalized as an asset? power washing the outside of the building replacing broken windows putting a new roof on the factory replacing burned-out light bulbs in the factory Question 2 When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry? debit Accounts Payable; credit Inventory debit Inventory, credit Accounts Payable debit Inventory, credit Cash Discounts debit Inventory, credit Purchases Question 3 Retained earnings O is equal to cash on hand is the same as contributed capital cannot have a debit balance changes are summarized in the Statement of Changes in Equity Moving to another question will save this response. Question 4 The primary difference between a periodic and perpetual inventory system is that a O periodic system determines the inventory on hand only at the end of the accounting period when a physical count is taken. o periodic system keeps a record showing the inventory on hand at all times. periodic system provides an easy means to determine inventory shrinkage. periodic system records the cost of the sale on the date the sale is made. Moving to another question will save this response. -> A Moving to another question will save this response. Question 5 Using a perpetual inventory system, the entry to record the return from a customer of the merchandise that was sold on account includes a o credit to Customer Refunds Payable debit to Inventory credit to Inventory debit to Cash Moving to another question will save this response. Question 6 When a financial statement is prepared according to generally accepted accounting principles (GAAP, expenses are recorded and reported on the income statement when they are incurred, whether or not cash is paid. when they are incurred and paid at the same time. if they are paid before they are incurred. if they are paid after they are incurred. A Moving to another question will save this response. Question 7 Indications that an account may be uncollectible include all of the following except the customer closes its business the customer is making small but regular payments the customer files for bankruptcy the customer cannot be located A Moving to another question will save this response. Questions 25 points During periods of increasing costs, the use of the UFO method of costing inventory will result in a lower amount of net income than would result from the use of the method. True False Question of Question 9 2.5 points if the current replacement cost of an item of inventory is 560 at the end of the reporting period and the original cost of that em recorded in inventory was the amount included in inventory on the balance sheet according to the lower of cost or market methods 515 560 O 575 $135 Question 10 2.5 points A new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of $5,000, and special acquisition fees of $6,000, would have a cost basis of $132,000 O $126,000 $121,000 $114,000
