Question 16
The direct write-off method records Bad Debt Expense in the year the specific account receivable is determined to be uncollectible.
Answer
True
False
Question 17
The depreciable cost of a building is the same as its acquisition cost.
Answer
True
False
Question 18
What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?
Answer
|
a. |
gross sales |
|
|
b. |
net income |
|
|
c. |
gross profit |
|
|
d. |
income from operations |
Question 19
When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is:
Answer
|
a. |
debit Cost of Merchandise Sold; credit Sales |
|
|
b. |
debit Cost of Merchandise Sold; credit Merchandise Inventory |
|
|
c. |
debit Merchandise Inventory; credit Cost of Merchandise Sold |
|
|
d. |
No journal entry is made to record the cost of merchandise sold. |
Question 20
In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance
per company’s records.
Answer
True
False
Question 21
A credit to the cash account will increase the account.
Answer True
False
Question 22
Liabilities are debts owed by the business entity.
Answer
True
False
Question 23
Revenues and expenses should be recorded in the same period to which they relate.
Answer
True
False
Question 24
On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an
accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment
for $55,000. What is the amount of the gain or loss on this transaction?
Answer
|
a. |
No gain or loss |
|
|
b. |
Gain of $25,000 |
|
|
c. |
Gain of $55,000 |
|
|
d. |
Cannot be determined |
Question 25
When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the
following:
Answer
|
a. |
debit Machinery; credit Cash and Accumulated Depreciation |
|
|
b. |
debit Cash and Depreciation Expense; credit Accumulated Depreciation |
|
|
c. |
debit Cash and Machinery; credit Accumulated Depreciation |
|
|
d. |
debit Cash and Accumulated Depreciation; credit Machinery |
Question 26
Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
Answer
|
a. |
Fees Earned |
|
|
b. |
Unearned Rent |
|
|
c. |
Depreciation Expense |
|
|
d. |
Salaries Expense |
Question 27
The interest on a 6%, 60-day note for $5,000 is $300.
Answer True
False
Question 28
In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.
Answer
True
False
Question 29
A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on
disposal of the fixed asset?
Answer
|
a. |
$3,500 gain |
|
|
b. |
$1,500 loss |
|
|
c. |
$2,000 gain |
|
|
d. |
$2,000 loss |
Question 30
The Miracle Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1, 2011, at 96. The journal entry to record the issuance will
show a
Answer
|
a. |
credit to Bonds Payable for $960,000. |
|
|
b. |
debit to Cash of $1,000,000. |
|
|
c. |
credit to Cash for $960,000. |
|
|
d. |
debit to Discount on Bonds Payable for $40,000. |
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