1) A truck costing $56,000 has accumulated depreciation of $50,000. The truck is scrapped for $0. The journey entry to record this transaction is:
A. debit Truck for $56,000, credit Accumulated Depreciation—Truck for $50,000, and credit Gain on Disposal for $6,000.
B. debit Accumulated Depreciation—Truck for $50,000 and credit Truck for $50,000.
C. debit Truck for $50,000, debit Loss on Disposal for $6,000 and credit Accumulated Depreciation—Truck for $56,000.
D. debit Loss on Disposal $6,000, debit Accumulated Depreciation—Truck for $50,000, and credit Truck for $56,000.
2) Which marketable securities are reported at cost on the balance sheet date?
A. Trading and held-to-maturity securities
B. Trading securities
C. Held-to-maturity securities
D. Available-for-sale securities
3) Which of the following would indicate poor internal control over accounts receivable?
A. The mailroom employees open the mail and give the cash receipts to another employee.
B. The person who handles accounts receivable wouldn't write off accounts as uncollectable.
C. The person handling cash receipts passes the receipts to someone who enters them into accounts receivable.
D. The same person handling cash receipts also records the accounts receivable transactions.
4) A truck costing $56,000 has accumulated depreciation of $50,000. The truck is scrapped for $500. The journal entry to record this transaction is:
A. debit Cash for $500, debit Loss on Disposal for $55,500, and credit Truck for $56,000.
B. debit Cash for $500, debit Truck for $50,000, debit Loss on Disposal for $5,500, and credit Accumulated Depreciation— Truck for $56,000.
C. debit Cash for $500, debit Accumulated Depreciation—Truck for $50,000, debit Loss on Disposal for $5,500, and credit
Truck for $56,000.
D. debit Loss on Disposal $6,000, debit Accumulated Depreciation—Truck for $50,000, and credit Truck for $56,000.
5) Tammy Industries inadvertently debited a $5,000 betterment as an ordinary expense. Which of the following will occur as a result of this mistake.
A. Retained earnings will be overstated by $5,000.
B. The asset will be understated by $5,000.
C. Net income will be overstated by $5,000.
D. The asset will be overstated by $5,000.
6) Which of the Following is not a benefit to extending credit to customers?
A. Wider range of customers
B. Increased profits
C. Bad-debt expenses
D. Increased revenues
7) Casey Company’s bank statement shows a bank balance of $43,267. The statement show a bank service charge of $50. Casey’s book balance outstanding checks of $5,288 and deposits in transit of $9,325. The bank-side reconciliation would show cash of:
A. $43,267.
B. $43,217.
C. $39,230.
D. $47,304.
8) Jewell Company has current assets of $56,000: long-term assets of $135,000; current liabilities of $44,000; and long-term liabilities of $90,000. Jewell Company’s debt ratio is:
A. 127.3%.
B. 78.6%.
C. 239.3%.
D. 70.2%
9) Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000;item B was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The amount at which item C should (rounded to the nearest dollar) is:
A. $72,000.
B. $29,167.
C. $50,000.
D. $83,300
10) Using a 360-day year, the maturity value of a 69-day note for $1,500 at 7% annual interest is (rounded to the nearest cent).
A. $1,605.00.
B. $20.13.
C. $1,520.13.
D. $1,584,88
11) Which of the following would not be considered a contingent liability?
A. Pending legal action
B. Potential fines from the EPA
C. Cosigning a loan
D. Mortgage payable
12) Taylor Company has given you the following information from its aging of accounts receivable. The current amount in the allowance for doubtful accounts is a $958 credit?
Current | $24,400 | 2% uncollectible |
31-60 days | 7,350 | 8% uncollectible |
61-90 days | 3,380 | 15% uncoll |
91 and up | 1,220 | 30% uncollectible |
Using this information, what is the amount of the journal entry to record the allowance for doubtful accounts?
A. $541
B. $1,949
C. $991
D. $2,457
13) By not accruing warranty expense:
A. reported liabilities will be understated, and net income will be overstated.
B. reported expenses will be overstated, and reported liabilities will be understated.
C. reported liabilities will be overstated, and net income will be understated.
D. reported expenses will be understated, and net income will be understated
14) If the amount extracted from a coal mine was different every year for four years, you would?
A. debit depletion expense for the same amount each year.
B. credit accumulated depletion—coal mine for the same amount each year.
C. recompute the depletion expense rate per unit each year.
D. use the same depletion expense rate per unit each year
15) Brandon Corporation purchased a vein of mineral ore for $3,250,000. It is estimated that 15,000,000 tons of ore are available to be extracted. The salvage value is determined to be $400,000. The estimation depletion expense for this year extraction of 1,76,000 tons of ore (rounded to the nearest dollar) is:
A. $400,000.
B. $381,333.
C. $428,267.
D. $334,400.
16) Brandon Company completed am aging of its accounts receivable and camp up with an estimated amount of $6,342. The credit sales for the period are $85,000. The balance in the allowance for doubtful account is a debit of $817. If Brandon uses 5% of credit sales as its estimating uncollectable accounts how much will the credit be to the allowance for doubtful accounts if Brandon uses the estimate of aging receivables as its method of estimating uncollectable accounts?
A. $5,067
B. $4,250
C. $7,159
D. $5,525
17) Which of the following would be considered a contingent liability?
A. Mortgage obligation
B. Accounts payable obligation
C. Sales tax obligation
D. Pending legal action
18) If a $6,000, 10%, 10-year bond was issued at 104 on October 1, 2011, how much interest will accrue on December 31 if interest payments are made annually?
A. $500
B. $104
C. $150
D. None
19) Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B
was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The
amount at which item B should be recorded is
A. ($55,000/$95,000) × $125,000.
B. ($55,000/$125,000) × $150,000.
C. ($55,000/$95,000) × $150,000.
D. ($55,000/$150,000) × $125,000.
20) A $400,000 issue of bonds that sold for $363,000 matures on August 1, 2015. The journal entry to record the payment of the bond on the maturity date is
A. debit bonds payable, $363,000; credit cash, $363,000.
B. debit bonds payable, $400,000; credit cash, $400,000.
C. debit cash, $363,000; credit bonds payable, $363,000.
D. debit cash, $400,000; credit bonds payable, $400,000.
