13. BFS Company sold an asset for $7,500 in cash. The asset had an historical cost of $30,000 and accumulated depreciation of $20,000 on the day it was sold. How much is the gain or loss on the sale?
A. $2,500 loss
B. $2,500 gain
C. $10,000 loss
D. $22,500 gain
14. A loss is a ________.
A. reduction in liabilities
B. decrease in cash related to operating a business
C. reduction in income that is incurred outside the normal course of business
D. reduction in an asset’s selling price
15. On January 1, 2011, Fred McGriff Company bought office computers that cost $43,000, with an estimated useful life of 10 years and an estimated salvage value of $3,000. The company uses the straight-line method of depreciation and has a calendar year end. For the year ended December 31, 2012, McGriff Company will report depreciation expense of ________ on the ________.
A. $4,000; income statement
B. $4,000; statement of cash flows
C. $4,300; income statement
D. $4,300; statement of cash flows
16. WDS Company owns a patent with an estimated useful life of 15 years, a zero salvage value, and a historical cost of $42,000. Net income is $200,000 before the year-end adjustment related to the patent. What will net income be after the proper year-end adjustment has been made?
17. On January 1, 2011, Petrel Shipping Company bought equipment that cost $65,000 with an estimated useful life of 10 years and an estimated salvage value of $5,000. The company uses the double-declining balance method of depreciation. What will be the BOOK VALUE of the asset on
December 31, 2012?
18. Use the following selected information from PDG Corporation to determine the asset turnover ratio for the year.
Beginning total assets $300,000
Ending total assets $350,000
Sales revenue $900,000
Total operating expenses $800,000
Net income $85,000
19. Use the following selected information from ABC Corporation to determine the asset turnover ratio for the year.
Total revenues $100,000
Total operating expenses $65,000
Beginning total assets $500,000
Ending total assets $440,000
Ending retained earnings $300,000
20. Which of the following is an example of a physical control over assets?
A. unlocked storage rooms
B. the people who have physical custody of assets should be different from the people who maintain the records for those assets
C. cash register
D. complete and reliable record-keeping