1. Which of the following statements is true?

A) In a capital lease, the lessee records the asset on its books.

B) A lessee will record depreciation expense for an operating lease.

C)An operating lease results in the recording of a liability and interest.

D) All of these.

E) None of these.

2.Matching

1.Method to estimate inventory based on standing relationship of cost to sales price.

2.Used by merchants to estimate inventory.

3.Selling price, minus completion and disposal costs.

4.Most recent costs remain in inventory.

5.Beginning Inventory + Purchases

A. Goods Available

B. Gross profit method

C. Net realizable value

D. FIFO

E. Retail method

3.Salvage value is ignored during the early years of life for an asset that is to be depreciated under the straight-line method.

True

False

4.Payroll withholdings are current liabilities to an employer.

True

False