Question 16

The direct write-off method records Bad Debt Expense in the year the specific account receivable is determined to be uncollectible.

Answer

True False

Question 17

The depreciable cost of a building is the same as its acquisition cost.

Answer

True False

Question 18

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Answer

	a.	gross sales
	b.	net income
	c.	gross profit
	d.	income from operations

Question 19

When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is:

Answer

	a.	debit Cost of Merchandise Sold; credit Sales
	b.	debit Cost of Merchandise Sold; credit Merchandise Inventory
	c.	debit Merchandise Inventory; credit Cost of Merchandise Sold
	d.	No journal entry is made to record the cost of merchandise sold.

Question 20

In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance per company's records.

Answer

True False

Question 21

A credit to the cash account will increase the account.

Answer True False

Question 22

Liabilities are debts owed by the business entity.

Answer

True False

Question 23

Revenues and expenses should be recorded in the same period to which they relate.

Answer

True False

Question 24

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?

Answer

	a.	No gain or loss
	b.	Gain of $25,000
	c.	Gain of $55,000
	d.	Cannot be determined

Question 25

When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following:

Answer

	a.	debit Machinery; credit Cash and Accumulated Depreciation
	b.	debit Cash and Depreciation Expense; credit Accumulated Depreciation
	c.	debit Cash and Machinery; credit Accumulated Depreciation
	d.	debit Cash and Accumulated Depreciation; credit Machinery

Question 26

Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?

Answer

	a.	Fees Earned
	b.	Unearned Rent
	c.	Depreciation Expense
	d.	Salaries Expense

Question 27

The interest on a 6%, 60-day note for $5,000 is $300.

Answer True False

Question 28

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.

Answer

True False

Question 29

A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?

Answer

	a.	$3,500 gain
	b.	$1,500 loss
	c.	$2,000 gain
	d.	$2,000 loss

Question 30

The Miracle Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2011, at 96. The journal entry to record the issuance will show a

Answer

	a.	credit to Bonds Payable for $960,000.
	b.	debit to Cash of $1,000,000.
	c.	credit to Cash for $960,000.
	d.	debit to Discount on Bonds Payable for $40,000.