ACC 557 WK 7 : 15 M/C QUESTIONS

ACC 557 WK 7 : 15 M/C QUESTIONS

Week 7 Quiz Questions

Multiple Choice Question 178

To qualify as natural resources in the accounting sense, assets must be

A replaceable.
B underground.
C of a mineral nature.
D physically extracted in operations.
Multiple Choice Question 122

Sargent Corporation bought equipment on January 1, 2013. The equipment cost $180,000 and had an expected salvage value of $30,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year using straight-line depreciation would be

A $180,000.
B $130,000.
C $150,000.
D $50,000.
Multiple Choice Question 207

Rooney Company incurred $420,000 of research and development cost in its laboratory to develop a patent granted on January 1, 2013. On July 31, 2013, Rooney paid $63,000 for legal fees in a successful defense of the patent. The total amount debited to Patents through July 31, 2013, should be:

A $420,000.
B $63,000.
C $483,000.
D $357,000.
Multiple Choice Question 92

Useful life is expressed in terms of use expected from the asset under the

A straight-line method.
B declining-balance method.
C units-of-activity method.
D none of these.
Multiple Choice Question 114

Moreno Company purchased equipment for $675,000 on January 1, 2012, and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $30,000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year 2014 will be

A $75,000.
B $51,660.
C $45,000.
D $81,660.
Multiple Choice Question 158

The book value of an asset will equal its fair market value at the date of sale if

A a gain on disposal is recorded.
B the plant asset is fully depreciated.
C no gain or loss on disposal is recorded.
D a loss on disposal is recorded.
Multiple Choice Question 154

If disposal of a plant asset occurs during the year, depreciation is

A not recorded if the asset is scrapped.
B recorded for the fraction of the year to the date of the disposal.
C recorded for the whole year.
D not recorded for the year.
Multiple Choice Question 141

A major disadvantage resulting from the use of bonds is that

A interest must be paid on a periodic basis.
B bondholders have voting rights.
C taxes may increase.
D earnings per share may be lowered.
Multiple Choice Question 173

A $600,000 bond was retired at 103 when the carrying value of the bond was $622,000. The entry to record the retirement would include a

A gain on bond redemption of $18,000.
B gain on bond redemption of $4,000.
C loss on bond redemption of $18,000.
D loss on bond redemption of $12,000.
Multiple Choice Question 199

The 2013 financial statements of Marker Co. contain the following selected data (in millions).

Current Assets $75
Total Assets 140
Current Liabilities 40
Total Liabilities 95
Cash 8

The debt to total assets ratio is

A 67.9%.
B 256%.
C 28.6%.
D 96.4%.

On September 1, Joe’s Painting Service borrows $100,000 from National Bank on a 4-month, $100,000, 6% note. What entry must Joe’s Painting Service make on December 31 before financial statements are prepared?

A Interest Expense2,000

Notes Payable2,000

B Interest Expense2,000

Interest Payable2,000

C Interest Payable2,000

Interest Expense2,000

D Interest Expense6,000

Interest Payable6,000

Multiple Choice Question 65

The relationship of current assets to current liabilities is used in evaluating a company’s

A long-range solvency.
B operating cycle.
C revenue-producing ability.
D short-term debt paying ability.
Multiple Choice Question 160

Each of the following accounts is reported as long-term liabilities except

A Discount on Bonds Payable.
B Bonds Payable.
C Premium on Bonds Payable.
D Interest Payable.
Multiple Choice Question 67

In most companies, current liabilities are paid within

A the operating cycle through the creation of other current liabilities.
B one year through the creation of other current liabilities.
C one year or the operating cycle out of current assets.
D the operating cycle out of current assets.
Multiple Choice Question 157

Hernandez Corporation issues 3,000, 10-year, 8%, $1,000 bonds dated January 1, 2013, at 98. The journal entry to record the issuance will show a

A debit to Cash for $2,960,000.
B debit to Cash of $3,000,000.
C credit to Discount on Bonds Payable for $60,000.
D credit to Bonds Payable for $3,040,000.

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