Questions for a practice study test for final. Use ABCD in your answer instead of writing it out. Thank You!

1 of 35

Which of the following would NOT be considered part of the cost of a constructed building?

	Contractor charges
	Architectural fees
	Building permit fees
	Realtor commissions

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2 of 35

Under the direct write-off method, to record the receipt of cash after an account has previously being written off, you would first

	debit Bad Debt Expense.
	debit Allowance for Doubtful Accounts.
	reinstate the customer's account.
	debit Cash and credit the customer's account.

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3 of 35

Which of the following would be considered a natural resource?

	Wheat
	Corn
	Livestock
	Timber

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4 of 35

An asset has a cost of $50,000 with a residual value of $10,000. It has a life of 5 years and was purchased on January 1. Its fourth full year of depreciation expense under double-declining-balance will be

	$7,200.
	$800.
	$4,320.
	$0.

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5 of 35

Which would be considered part of land improvements?

	Signs
	Removing unwanted buildings from the land
	Fencing
	In-ground sprinkler systems

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6 of 35

Cesario Corporation purchases a machine for $125,000. It has an estimated salvage value of $10,000 and is expected to produce 50,000 units in its lifetime. During the first year of operation, it produced 14,500 units. To the nearest dollar, the depreciation for the first year under the units of production method will be

	$35,500.
	$33,350.
	$36,250.
	$31,250.

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7 of 35

When using the allowance method for uncollectible accounts, the aging method is called the

	Allowance approach.
	Income Statement approach.
	Direct write-off approach.
	Balance Sheet approach.

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8 of 35

Which of the following would be considered a cash equivalent?

	Time deposits
	Checks
	Currency
	Money orders

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9 of 35

Leo Company has a petty cash fund of $300. At the end of the month, $42.38 remains in the fund along with $260.75 in various receipts for purchases. The journal entry to replenish the fund would be

	debit various expenses, $260.75, and credit Cash for $260.75.
	debit Petty Cash for $257.62, and credit Cash for $257.62.
	debit various expenses, $260.75; credit Cash Over for $3.13, and credit Cash for $257.62.
	debit various expenses, $254.49; debit Cash Short for $3.13, and credit Cash for $257.62.

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10 of 35

Gallego & Co. reported sales of $515,000; beginning net Accounts Receivable of $212,000; and ending net Accounts Receivable of $224,000. Gallego & Co.'s receivable collection period (rounded to the nearest day) is

	159.
	150.
	106.
	155.

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11 of 35

When companies extend credit to customers

	the likelihood of not collecting money from customers increases.
	sales generally decrease.
	the likelihood of not collecting money from customers decreases.
	the amount of business stays the same.

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12 of 35

Lionworks Company has cash of $143,000; net Accounts Receivable of $89,000; short-term investments of $35,000; and prepaid expenses of $40,000. It also has $50,000 in current liabilities and $80,000 in long-term liabilities. The quick ratio for Lionworks Company is

	6.14.
	5.34.
	3.34.
	4.64.

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13 of 35

Which of the following is NOT true concerning NSF checks?

	NSF checks represent customer checks that the business previously deposited but have turned out to be worthless.
	The amount of the NSF check will need to be added to the book balance.
	NSF stands for nonsufficient funds.
	The amount of the NSF check will need to be subtracted from the book balance.

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14 of 35

Leo's Lawn Care purchased equipment on January 1. The cost was $15,000, and the equipment had a residual value of $4,000. The equipment was given a useful life of 7 years. After the end of two years, it was determined that the equipment would be obsolete in 3 more years, and the residual value would still be $4,000. What will be the depreciation under the straight-line method to the nearest dollar for the third year?

	$2,619
	$7,857
	$3,142
	$1,571

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15 of 35

Goodwill is defined as

	liabilities minus assets.
	the acquisition costs of a franchise.
	excess of the cost of the purchase of a business over the market value of its net assets.
	assets minus liabilities.

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16 of 35

During the month, Evergreen Roofing settled $300 in warranty claims by replacing defective flashing. Evergreen uses an estimated warranty account. The journal entry to record the settled claims would have been

	debit Warranty Expense $300; credit Cash $300.
	debit Estimated Warranty Payable $300; credit Inventory $300.
	debit Estimated Warranty Payable $300; credit Cash $300.
	debit Warranty Expense $300; credit Estimated Warranty Payable $300.

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17 of 35

TLR Productions reported Interest expense of $8,300, Income tax expense of $26,400, and Net income of $88,700. TLR's interest coverage ratio is (rounded to three decimals)

	0.067.
	0.072.
	14.867.
	13.867.

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18 of 35

The entry to record S&C, Inc. selling 1,000 shares of $12 par common stock for $20 per share would be to

	debit Cash $12,000; debit Paid-In Capital in Excess of ParCommon $8,000; credit Common Stock $20,000.
	debit Cash $12,000; credit Common Stock $12,000.
	debit Cash $20,000; credit Common Stock $20,000.
	debit Cash $20,000; credit Common Stock $12,000; credit Paid-In Capital in Excess of Par-Common Stock $8,000.

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19 of 35

The entry to record selling 300 shares of stated value $60 common stock for $70 per share would be

	debit Cash $21,000; credit Common Stock $18,000; credit Paid-in Capital in Excess of Stated Value$3,000.
	debit Cash $21,000; credit Common Stock $21,000.
	debit Cash $18,000; debit Paid-in Capital in Excess of Stated Value$3,000; credit Common Stock $21,000.
	debit Cash $18,000; credit Common Stock $18,000.

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20 of 35

Salty's Seafood has 2,000 shares of $10-par common stock outstanding. During the current year, the company distributed a 10% stock dividend. The market value of the stock at that time was $16/share. After the distribution, Salty's total Stockholders' Equity should increase or decrease by

	$1,200.
	$2,000.
	($3,200).
	$0.

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21 of 35

The rate of interest that is printed on a bond is called the ________ rate of interest.

	variable
	stated
	maturity
	market

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22 of 35

The adjusting entry to record incurred but not yet paid employee wages includes

	a debit to Cash.
	a debit to Wages Payable.
	a debit to Wages Expense.
	a debit to Wages Earned.

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23 of 35

At least one class of stock MUST have

	voting rights.
	liquidation rights.
	preemptive rights.
	dividend rights.

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24 of 35

On October 31, 2014, Aspen Inc. recorded their semiannual bond interest expense that contained a credit to Discount on bonds payable of $1,200. The adjusting entry on December 31, 2014 will show a credit to Discount on bonds payable of

	$400.
	$600.
	$800.
	$1,200.

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25 of 35

Charmed, Inc. reacquired 5,000 shares of its $15-par common stock for $13/share. The debit to Treasury Stock will be

	$65,000.
	$75,000.
	$10,000.
	based on the last treasury stock transaction.

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26 of 35

The basic unit of stock is called a(n)

	authorization.
	ownership record.
	certificate.
	share.

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27 of 35

Accrued liabilities, such as interest payable, would be considered a(n)

	unknown liability.
	known liability.
	contingent liability.
	estimated liability.

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28 of 35

By NOT accruing warranty expense

	reported expenses will be understated, and net income will be understated.
	reported expenses will be overstated, and reported liabilities will be understated.
	reported liabilities will be understated, and net income will be overstated.
	reported liabilities will be overstated, and net income will be understated.

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29 of 35

Which of the following would NOT be a liability?

	An obligation that is estimated in amount
	The signing of a three-year employment contract at a fixed annual salary
	A note payable with no specific maturity date
	An obligation to provide goods or services in the future

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30 of 35

One type of liability that is easy to overlook is a(n)

	tax liability.
	account payable.
	contingent liability.
	note payable.

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31 of 35

Inventory turnover measures the relationship between

	total assets and merchandise inventory.
	cost of goods sold and total liabilities.
	cost of goods sold and merchandise inventory.
	merchandise inventory and current liabilities.

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32 of 35

Transactions involving the purchase and sale of long-term assets, lending money, and collecting the principal on loans are called

	operating activities.
	investing activities.
	financing activities.
	buying and selling activities.

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33 of 35

The Statement of Cash Flows reports the sources and uses of cash from all of the following EXCEPT

	financing activities.
	managerial activities.
	operating activities.
	investing activities.

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34 of 35

Which of the following ratios measures the earnings of a company on each dollar of assets invested?

	Return on equity
	Return on assets
	Return on sales
	Current ratio

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35 of 35

Are all decreases to cash the result of an unfavorable situation?

	No. Cash could decrease as a result of acquiring long-term assets the company needs to expand or stay competitive.
	Yes. Cash could decrease as a result of paying off long-term debt, which is an unfavorable action to take.
	No. Cash could decrease because the company issued more stock.
	Yes. Decreases to cash are always bad.