The present value is the value today of a single amount to be paid or received at a
specific date in the future.
a. True
b. False
Royal Company purchased a dump truck at the beginning of 2012 at a cost of $60,000.
The truck had an estimated life of 6 years and an estimated residual value of $24,000.
On January 1, 2014, the company made major repairs of $20,000 to the truck that
extended the life 1 year. Thus, starting with 2014, the truck has a remaining life of 5
years and a new salvage value of $8,000. Royal uses the straight-line depreciation
method. When calculating depreciation for 2014, Royal should
a. add the $20,000 to the book value at December 31, 2013 and then allocate the revised
basis over the remaining adjusted useful life of 5 years.
b. report the effect of the change in life as an expense on the income statement in 2013.
c. ignore the change in life on the original cost of $60,000 and depreciate the additional
$20,000 cost separately over its useful life.
d. expense the $20,000 and depreciate the original cost of $60,000 over its revised
estimated total live of 7 years.
Given below are the accounts from Surf Corporation’s ledger accounts after adjustments
have been posted at December 31, 2014.
A) Identify which adjustments that Surf Corporation most likely made that are: 1)
Accrued assets 2) Accrued liabilities B) Which accounts listed above would not be used
in a cash basis system?
The following selected data are taken from the financial statements of Ulysses
Company:
REQUIRED:
1> Compute the following ratios for Ulysses Company:
a. Return on sales
b. Asset turnover (Assume that total assets at the beginning of the year were
$1,600,000.) Round final answers to 3 decimals.
c. Return on assets
d. Return on common stockholders’ equity (Assume that the only changes in
stockholders’ equity during the year were from the net income for the year and
dividends on the preferred stock.)
2> Comment on Ulysses’ use of leverage. Has it successfully employed leverage?
Explain.
Choose from the following list of account titles the one that most accurately fits the des
cription of that account or is an example of that account.An account title may be used m
ore than once or not at all.
a. Cash
b. Prepaid Asset
c. Investments
d. Taxes Payable
e. Preferred Stock
f. Accounts Receivable
g. Land
h. Accounts Payable
i. Retained Earnings
j. Notes Receivable
k. Buildings
l. Notes Payable
m. Common Stock
Amounts owed on an open account to a vendor, due in 70 days
Several items from the financial statements of Standard Tires are listed below. Use the f
ollowing answer choices to identify the type of accountf
or each item listed. Place your answers in the space provided.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners’ equity Accounts payable
Several items from the financial statements of Standard Tires are listed below. Use the f
ollowing answer choices to identify the type of accountf
or each item listed. Place your answers in the space provided.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners’ equity Capital stock
If technology changes rapidly, a firm should
a. expense plant asset immediately because of the uncertainty of future benefits.
b. depreciate plant assets over long periods of time.
c. consider an accelerated rate of depreciation.
d. use the straight-line method of depreciation as it is the easiest.
The excess of the face value of bonds over the issue price is known as a premium.
a. True
b. False
Ending inventory valued under the FIFO method will be the same regardless of whether
the periodic system or the perpetual system is used.
a. True
b. False
How are assets which are expected to be realized in cash, sold, or consumed within the
normal operating cycle of a business or within one year (if the operating cycle is shorter
than one year) reported on a classified balance sheet?
a. Property, plant, and equipment
b. Current assets
c. Intangible assets
d. Current liabilities
Gommert Co. purchased land and a building for $425,000. The appraised values of the
land and the building were $150,000 and $450,000, respectively. In addition, the
attorney was paid $10,000 for handling the closing on the property. A. What amounts
will be recorded as the costs of the land and building? B. What is the accounting
justification against increasing the land and building accounts for their appraised
values?
Expenses originate from
a. using an asset or recognizing liabilities.
b. incurring liabilities or providing services to customers.
c. collecting cash from customers.
d. paying off liabilities.
Which of the following situations does not require an adjusting entry at the end of
May?
a. At the end of May, Bolton Industries pays the custodian for May office cleaning
services.
b. On May 1, Bolton Industries paid rent for six months on its office building.
c. On May 1, Bolton Industries began delivery service to a client who will pay at the
end of a three-month period.
d. On May 1, Bolton Industries purchased delivery equipment with an estimated useful
life of six years.
On May 31, 2015, Evergreen Corp. purchased a 120-day, 6% certificate of deposit for
$60,000. The CD was redeemed on September 28, 2015. Prepare the journal entries on
Evergreen’s books to account for:
a. The purchase of the CD.
b. The accrual of interest adjustment for interest earned through June 30, the end of the
company’s fiscal year.
c. The redemption of the CD. Assume 360 days in a year.
Wolfe Inc. Wolfe Inc. reports these account balances at January 1, 2015
See the account balances for Wolfe Inc. On January 31, Wolfe collected $12,000 of its
accounts receivable and paid $11,000 on its note payable. In Wolfe’s trial balance
prepared on January 1, 2015, the total of the credit column is:
a. $182,000
b. $286,000
c. $196,000
d. $166,000
Lawton Corporation’s endÂofÂyear balance sheet consisted of the following amounts:
What amount should Lawton report on its balance sheet for total assets?
a. $100,000
b. $161,000
c. $194,000
d. $195,000