acc 557 wk 7 15 m c questions 498271

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.