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1 . Internal control is defined, in part, as a plan
that safeguards
a. all balance sheet accounts.
b. assets.
c. liabilities.
d. capital stock.
2. Having one person responsible for the related
activities of ordering merchandise, receiving goods, and paying for them
a. increases the potential for errors and fraud.
b. decreases the potential for errors and fraud.
c. is an example of good internal control.
d. is a good example of safeguarding the
company's assets.
3. Control over cash
disbursements is generally more effective when
a. all bills are paid
in cash.
b. disbursements are
made by the accounts payable subsidiary clerk.
c. payments are made by
check.
d. all purchases are
made on credit.
4. An
employee authorized to sign checks should not record
a. owner cash contributions.
b. mail receipts.
c. cash disbursement transactions.
d. sales transactions.
5.. The
relationship between current liabilities and current assets is
a. useful in
determining income.
b. useful in
evaluating a company's liquidity.
c. called the matching
principle.
d. useful in
determining the amount of a company's long-term debt.
6. In preparing its bank reconciliation for the
month of April 2014, Delano, Inc. has available the following information.
Balance per bank statement, 4/30/14 $78,600
NSF check returned with 4/30/14 bank
statement 940
Deposits in transit, 4/30/14 10,000
Outstanding checks, 4/30/14 10,400
Bank service charges for April 60
What
should be the adjusted cash balance at April 30, 2014?
a. $77,260.
b. $77,600.
c. $78,020.
d. $78,200.
7. Which one of the following
items is not considered a part of the cost of a truck purchased for
business use?
a. Sales tax
b. Truck license
c. Freight charges
d. Cost of lettering on side of truck
8. The four subdivisions
for plant assets are
a. land, land improvements, buildings, and
equipment.
b. intangibles, land, buildings, and equipment.
c. furnishings and fixtures, land, buildings,
and equipment.
d. property, plant, equipment, and land.
9. A current
liability is a debt that can reasonably be expected to be paid
a. within one year or
the operating cycle, whichever is longer.
b. between 6 months
and 18 months.
c. out of currently
recognized revenues.
d. out of cash
currently on hand.
10. Depreciation is the process of allocating the cost of a plant
asset over its service life in
a. an equal and equitable manner.
b. an accelerated and accurate manner.
c. a systematic and rational manner.
d. a conservative market-based manner.
11 . The book value of an
asset is equal to the
a. asset's fair value less its historical cost.
b. blue book value relied on by secondary
markets.
c. replacement cost of the asset.
d. asset's cost less accumulated depreciation.
12. A company purchased factory equipment on April 1, 2014 for $160,000.
It is estimated that the equipment will have a $20,000 salvage value at the end
of its 10-year useful life. Using the straight-line method of depreciation, the
amount to be recorded as depreciation expense at December 31, 2014 is
a. $16,000.
b. $14,000.
c. $10,500.
d. $12,000.
13. The units-of-activity method is generally not suitable
for
a. airplanes.
b. buildings.
c. delivery equipment.
d. factory machinery.
14. A plant asset
cost $288,000 and is estimated to have a $36,000 salvage value at the end of
its 8-year useful life. The annual depreciation expense recorded for the third
year using the double-declining-balance method would be
a. $24,120.
b. $40,500.
c. $35,436.
d. $27,570.
15. A factory machine was purchased for $375,000 on January 1, 2014.
It was estimated that it would have a $75,000 salvage value at the end of its
5-year useful life. It was also estimated that the machine would be run 40,000
hours in the 5 years. The company ran the machine for 4,000 actual hours in 2014.
If the company uses the units-of-activity method of depreciation, the amount of
depreciation expense for 2014 would be
a. $37,500.
b. $60,000.
c. $75,000.
d. $30,000.
16. A truck that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded
was disposed of for $18,000 cash. The entry to record this event would include
a
a. gain of $6,000.
b. loss of $6,000.
c. credit to the Equipment account for $12,000.
d. credit to Accumulated Depreciation for $60,000.
17. The following totals for the month of
April were taken from the payroll register of Asplend Company.
Salaries and wages $72,000
FICA taxes withheld 5,508
Income taxes withheld 15,000
Medical insurance deductions 2,700
Federal unemployment taxes 192
State unemployment taxes 1,296
18. The
entry made by Hoffman Granite on January 1 to record the proceeds and issuance
of the note is
a. Interest
Expense.................................................................... 36,000
Cash....................................................................................... 564,000
Notes
Payable.............................................................. 600,000
b. Cash....................................................................................... 600,000
Notes
Payable.............................................................. 600,000
c. Cash....................................................................................... 600,000
Interest
Expense.................................................................... 36,000
Notes
Payable.............................................................. 636,000
d. Cash....................................................................................... 600,000
Interest
Expense.................................................................... 36,000
Notes
Payable.............................................................. 600,000
Interest
Payable............................................................ 36,000
19. What
is the adjusting entry required if Hoffman Granite Company prepares financial
statements on June 30?
a. Interest
Expense.................................................................... 24,000
Interest
Payable............................................................ 24,000
b. Interest
Expense.................................................................... 24,000
Cash.............................................................................. 24,000
c. Interest
Payable..................................................................... 24,000
Cash.............................................................................. 24,000
d. Interest
Payable..................................................................... 24,000
Interest
Expense........................................................... 24,000
20. What
entry will Hoffman Granite make to pay off the note and interest at maturity
assuming that interest has been accrued to September 30?
a. Notes
Payable....................................................................... 636,000
Cash.............................................................................. 636,000
b. Notes
Payable....................................................................... 600,000
Interest
Payable..................................................................... 36,000
Cash.............................................................................. 636,000
c. Interest
Expense.................................................................... 36,000
Notes
Payable....................................................................... 600,000
Cash.............................................................................. 636,000
d. Interest
Payable..................................................................... 24,000
Notes
Payable....................................................................... 600,000
Interest
Expense.................................................................... 12,000
Cash.............................................................................. 636,000
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