FINANCE

18)

 

A plant asset cost $192,000 and is estimated to have an $24,000 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.   $16,080.

b.   $27,000.

c.   $23,624.

d.   $18,380.

 

19)

 

From a liquidity standpoint, it is more desirable for a company to have current

a.   assets equal current liabilities.

b.   liabilities exceed current assets.

c.   assets exceed current liabilities.

d.         liabilities exceed long-term liabilities

 

20)

 

The relationship of current assets to current liabilities is used in evaluating a company’s

a.   operating cycle.

b.   revenue-producing ability.

c.   short-term debt paying ability.

d.   long-range solvency.

 

 

21)

 

Which of the following is usually not an accrued liability?

a.   Interest payable

b.   Wages payable

c.   Taxes payable

d.   Notes payable

 

22)

 

In most companies, current liabilities are paid within

a.   one year through the creation of other current liabilities.

b.   the operating cycle 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.

 

23)

 

The entry to record the issuance of an interest-bearing note credits Notes Payable for the note’s

a.   maturity value.

b.   market value.

c.   face value.

d.   cash realizable value.

 

 

24)

 

With an interest-bearing note, the amount of assets received upon issuance of the note is generally

a.   equal to the note’s face value.

b.   greater than the note’s face value.

c.   less than the note’s face value.

d.   equal to the note’s maturity value.

 

25)

 

Unearned Rent Revenue is

a.   a contra account to Rent Revenue.

b.   a revenue account.

c.   reported as a current liability.

d.   debited when rent is received in advance.

 

26)

 

Sales taxes collected by the retailer are recorded as a(n)

a.   revenue.

b.   liability.

c.   expense.

d.   asset.

 

 

27)

 

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 Payable……………………………………………………………          2,000

Interest Expense…………………………………………………..                               2,000

b.   Interest Expense…………………………………………………………..          6,000

Interest Payable……………………………………………………                               6,000

c.   Interest Expense…………………………………………………………..          2,000

Interest Payable……………………………………………………                               2,000

d.   Interest Expense…………………………………………………………..          2,000

Notes Payable………………………………………………………                               2,000

 

 

28)

 

On September 1, Joe’s Painting Service borrows $100,000 from National Bank on a 4-month, $100,000, 6% note. The entry by Joe’s Painting Service to record payment of the note and accrued interest on January 1 is

a.   Notes Payable………………………………………………………………      102,000

Cash……………………………………………………………………                           102,000

b.   Notes Payable………………………………………………………………      100,000

Interest Payable……………………………………………………………          2,000

Cash……………………………………………………………………                           102,000

c.   Notes Payable………………………………………………………………      100,000

Interest Payable……………………………………………………………          6,000

Cash……………………………………………………………………                           106,000

d.   Notes Payable………………………………………………………………      100,000

Interest Expense…………………………………………………………..          2,000

Cash……………………………………………………………………                           102,000

 

29)

 

On October 1, 2012, Pennington Company issued an $80,000, 10%, nine-month interest-bearing note. Assuming interest was accrued in June 30, 2013, the entry to record the payment of the note on July 1, 2013, will include a:

a.   debit to Interest Expense of $2,000.

b.   credit to Cash of $80,000

c.   debit to Interest Payable of $6,000.

d.   debit to Notes Payable of $86,000.

 

 

30)

 

Crawford Company has total proceeds (before segregation of sales taxes) from sales of $4,770. If the sales tax is 6%, the amount to be credited to the account Sales Revenue is:

a.   $4,770.

b.   $4,484.

c.   $5,056.

d.   $4,500.

 

 

31)

 

Reliable Insurance Company collected a premium of $30,000 for a 1-year insurance policy on May 1. What amount should Reliable report as a current liability for Unearned Insurance Revenue at December 31?

a.   $0.

b.   $10,000.

c.   $20,000.

d.   $30,000.

 

32)

 

A company receives $198, of which $18 is for sales tax. The journal entry to record the sale would include a

a.   debit to Sales Tax Expense for $18.

b.   credit to Sales Taxes Payable for $18.

c.   debit to Sales Revenue for $198.

d.   debit to Cash for $180.

 

 

33)

 

A company receives $348, of which $28 is for sales tax. The journal entry to record the sale would include a

a    debit to Sales Tax Expense for $28.

b.   debit to Sales Taxes Payable for $28.

c.   debit to Sales Revenue for $348.

d.   debit to Cash for $348.

 

 

34)

 

Most companies involved in interstate commerce are required to compute overtime at

a.   the worker’s regular hourly wage.

b.   1.25 times the worker’s regular hourly wage.

c.   1.5 times the worker’s regular hourly wage.

d.   2.5 times the worker’s regular hourly wage.

 

 

35)

 

Jan Goll has worked 44 hours this week. She worked in excess of 8 hours each day. Her regular hourly wage is $18 per hour. What are Jan’s gross wages for the week? (The company Jan works for is in compliance with the Fair Labor Standards Act.)

a.   $792

b.   $828

c.   $1,188

d.   $864

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