Question 1. Merchandise inventory is reported on the balance sheet in the section entitled _____.
current assets
fixed assets
current liabilities
stockholders’ equity
Question 2. Question : A machine with a useful life of 10 years and a residual value of $4,000 was purchased for $30,000. What is annual depreciation under the straight-line method?
$3,000
$3,400
$2,600
$5,200
Question 3. Question : The Drilling Company purchased a mining site for $500,000 on July 1, 2010. The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2010, the company extracted 6,500 tons of ore. The depletion expense for 2010 is
$37,700
$42,000
$32,500
$27,300
Question 4. Question : What type of account is Allowance for Doubtful Accounts?
Contra asset
Asset
Revenue
Expense
Question 5. Question : Use the following data to calculate cost of merchandise sold under FIFO method.
September 1 Beginning Inventory 15 units @ $20
September 10 Purchases 20 units @ $25
September 20 Purchases 25 units @ $28
September 30 Ending Inventory 30 units
$825
$750
$675
$600
Question 6. Question : A 60-day, 10% note for $6,000 dated April 15 is received from a customer on account.
The face value of the note is _______.
: $6,100
$5,400
$5,900
$6,000
Question 7. Question : In reference to a promissory note, the person who makes the promise to pay is called the _______.
maker
payee
seller
receiver
Question 8. Question : The due date of a 60-day note dated July 12 is _______.
: September 11
September 8
September 9
September 10
Question 9. Question : A written promise to pay a sum of money on demand or at a definite time is called a (n) _______.
default
deferral
accrual
promissory note
Question 10. Question : A note receivable due in 90 days is listed on the balance sheet under _______.
long-term liabilities
fixed assets
current liabilities
current assets
Question 11. Question : A machine was purchased for $60,000. It has a useful life of 5 years and a residual value of $6,000. Under the straight-line method, what is annual depreciation expense?
$13,200
$12,000
$11,000
$10,800
Question 12. Question : A note receivable due in five years is listed on the balance sheet under the caption _______.
investments
current assets
fixed assets
stockholders’ equity
Question 13. Question : Goodwill is _______.
amortized similar to other intangibles
only written down if an impairment in value occurs
charged to expense immediately
amortized over 40 years or its economic life, whichever is shorter
Question 14. Question : The two most widely used methods for determining the cost of inventory are _______.
FIFO and LIFO
FIFO and average cost
LIFO and average cost
gross profit and average cost
Question 15. Question : Salvage value has a similar meaning as _______.
residual value
scrap value
book value
both residual value and scrap value
Question 16. Question : Receivables are usually a significant portion of _______.
total current liabilities
total liabilities
total current assets
total assets
Question 17. Question : The inventory data for an item for November are:
Nov. 1 Inventory 25 units at $20
10 Purchased 30 units at $21
30 Purchased 10 units at $22
Sold 35 units
Using the last-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30?
$640
$623
$600
$605
Question 18. Question : Intangible assets are used in operations but _______.
cannot be specifically identified
cannot be sold
lack physical substance
cannot be long-lived
Question 19. Question : Book value is defined as _______.
current market value less residual value
cost less residual value
current market value less accumulated depreciation
cost less accumulated depreciation
Question 20. Question : To measure depreciation, all of the following must be known EXCEPT:
Market value
Residual value
Historical cost
Estimated life
