Accounting Exam 3 Practice PDF

Preview

Summary

Download Accounting Exam 3 Practice PDF

Description

Chapter 8 1. Natural resources are assets that include standing timber, mineral deposits, and oil and gas fields. = True 2. Amortization is the process of allocating the cost of natural resources to periods when they are consumed. = True 3. Natural resources may be reported under either plant assets or their own separate category on the balance sheet. = True 4. Plant assets are defined as: Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business.

5. One characteristic of plant assets is that they are: Intangible 6. The useful life of a plant asset is: The length of time it is productively used in a company's operations.

7. Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method? = $544? 8. A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the amount of accumulated depreciation at the end of the second year? = $81,600 9. Amortization is: The systematic allocation of the cost of an intangible asset to expense over its estimated useful life.

10. Owning a patent: Gives the owner exclusive rights to manufacture and sell a patented item or to use a process for 20 years.

11. Holding a copyright: Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.

12. A leasehold is: The rights granted to the lessee by the lessor of a lease. 13. Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500

units of product. Determine the machines' second year depreciation under the double-declining-balance method. = $20,880? 14. Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the straight-line method. = $24,000 15. Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the double-declining-balance method. = $54,000 16. Victory Company purchases office equipment at the beginning of the year at a cost of $15,000. The machine is depreciated using the straight-line method. The machine's useful life is estimated to be 7 years with a $1,000 salvage value. The journal entry to record the first year’s depreciation is: ??? 17. When originally purchased, a vehicle costing $26,100 had an estimated useful life of 8 years and an estimated salvage value of $3,300. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals: = $5,700.00 18. A company used straight-line depreciation for an item of equipment that cost $15,600, had a salvage value of $3,600 and a six-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,560 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life: = $2,680 19. Beckman Enterprises purchased a depreciable asset on October 1, Year 1 at a cost of $104,000. The asset is expected to have a salvage value of $15,100 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, Year 2 will be: ??? 20. A company had average total assets of $927,000. Its gross sales were $1,095,000 and its net sales were $970,000. The company's total asset turnover equals: = 1.05

Chapter 9 1. A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events = True 2. All expected future payments are liabilities: False 3. A liability cannot be divided between current and noncurrent liabilities: False 4. A company cannot have a liability if the amount of the obligation is unknown: False 5. A liability may exist even if there is uncertainty about whom to pay, when to pay, or how much to pay: True 6. An employee earnings report is a cumulative record of each employee's hours worked, gross earnings, deductions, and net pay: True 7. Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as: Long-term liabilities 8. An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $128,400. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is: $2,830.50 9. An employee earned $100,000 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $128,400 maximum per year and the rate for FICA Medicare 1.45% of all earnings. The employer’s total FICA payroll tax for this employee is: $7,650 10. Employee vacation benefits: Are estimated liabilities

11. A company sold $12,000 worth of bicycles with an extended warranty. The company’s experience is that warranty expense averages 2% of sales. The company should: ??? 12. A company sold $12,000 worth of bicycles with an extended warranty. The company’s experience is that warranty expense averages 2% of sales. The current period’s entry to record the warranty expense is: ??? debit sales allowances 13. The deferred income tax liability: ??? 14. A company has a selling price of $1,800 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each. During November, the company sold 30,000 printers, and 400 printers were serviced under the warranty. What is the company's warranty expense for the month of November? = $45,000? (1800 x 2% x 30000 /24) 15. On December 1, Victoria Company signed a 90-day, 4% note payable, with a face value of $5,400. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.) = $18 16. On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $26,100. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.) = Debit Interest Expense, $348; credit Interest Payable, $348. 17. On April 12, Hong Company agrees to accept a 60-day, 10%, $5,300 note from Indigo Company to extend the due date on an overdue accounts payable. What is the journal entry needed to record the transaction by Indigo Company? = Debit Notes Payable $5,300; credit Accounts Payable $5,300.???

Chapter 10 1. A company borrows $40,000 and issues a 3-year, 10% installment note with interest payable annually. The factor for the present value of an annuity at 10% for 3 years is 2.4869. The factor for the present value of a single sum at 10% for 3 years is 0.7513. The amount of the annual interest payment is $16,084.28. = False 2. An annuity is a series of equal payments at equal time intervals: True 3. Present values can be found using Excel, a calculator or present value tables: True 4. The factor for the present value of an annuity at 8% for 10 years is 6.7101. This means that an annuity of ten $15,000 payments at 8% has a present value of $2,235. =False 5. The factor for the present value of an annuity for 6 years at 10% is 4.3553. This means that an annuity of six $2,000 payments at 10% is the equivalent of $8,710.60 today: True 6. Sinking Fund Bonds: Require the issuer to set aside assets to pay the bonds at maturity 7. A bond traded at 102½ means that: The bond is traded at 102.5% of its par value 8. Secure Bonds: Have specific assets of the issuing company pledged as collateral 9. Bonds owned by investors whose names and addresses are recorded by the issuing company, and for which interest payments are made

with checks or cash transfers to the bondholders, are called: Registered bonds 10. A company may retire bonds by all but which of the following means?: Paying all future interest and cancelling the debt 11. A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,500. The company calls these bonds at a price of $97,000, the gain or loss on retirement is: $1,500 loss 12. Clabber Company has bonds outstanding with a par value of $100,000 and a carrying value of $97,300. If the company calls these bonds at a price of $95,000, the gain or loss on retirement is: ??? (not 2,700 loss) 13. A company has bonds outstanding with a par value of $100,000. The unamortized premium on these bonds is $2,700. If the company retired these bonds at a call price of $99,000, the gain or loss on this retirement is: $3,700 gain 14. Chang Industries has bonds outstanding with a par value of $200,000 and a carrying value of $203,000. If the company calls these bonds at a price of $201,000, the gain or loss on retirement is: $2,000 gain 15. A corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been amortized, the corporation called the bonds at $990,000. The gain or loss on this retirement is: $22,000 gain 16. On January 1, Year 1, Stratton Company borrowed $100,000 on a 10year, 7% installment note payable. The terms of the note require Stratton to pay 10 equal payments of $14,238 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, Year 1 is: ??? 17. On January 1, Year 1, Stratton Company borrowed $100,000 on a 10year, 7% installment note payable. The terms of the note require Stratton to pay 10 equal payments of $14,238 each December 31 for 10 years. The required general journal entry to record the payment on the note on December 31, Year 2 is: ??? 18. On January 1, Parson Freight Company issues 7.5%, 10-year bonds with a par value of $2,100,000. The bonds pay interest semiannually. The market rate of interest is 8.5% and the bond selling price was $1,957,302. The bond issuance should be recorded as: ???

19. On January 1 of Year 1, Congo Express Airways issued $2,700,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $2,470,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $7,667 every six months. After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of: ??? 20. On January 1, a company issued and sold a $406,000, 7%, 10-year bond payable, and received proceeds of $401,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is: ??? 21. A company issued 5-year, 7% bonds with a par value of $90,000. The company received $87,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is: ??? 22. A company issued 7%, 5-year bonds with a par value of $125,000. The market rate when the bonds were issued was 8%. The company received $119,935 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is: ???

Vacation Questions Utah - Erosion sand Utah - Bryce Canyon Canav went on a 4 wheeler - dug it out Kissimmee preserve North Carolina mountains Elephant charged vehicle in south Africa South Africa - dana beach South cape town - boulders beach where he saw penguins Port Elizabeth Tsirisikamma national park Boots grand dog Mila

Roody rip Napoleon Golf course neiza / stellanba Hugest bridge bungee jumping...