Bing’s Export Co. Bing’s Export Co. purchased a new delivery truck at the beginning of
2015. The truck has a cost of $37,000, an estimated life of 5 years, and an estimated
residual value of $7,000. A full year’s depreciation expense is to be recorded in 2015.
The truck was driven 20,000 miles during 2015 and 24,000 miles during 2016. The
number of expected miles over five years is 100,000.
Refer to information for Bing’s Export Co. By what amount would
double-declining-balance depreciation exceed straight-line depreciation over the 5-year
life of the truck?
a. The salvage value of $7,000.
b. Cost less total depreciation.
c. Cost plus total depreciation.
d. Total depreciation expenses under double-declining-balance and straight-line
depreciation are equal.
Interest is capitalized on all purchased assets.
a. True
b. False
Match the costs that might be included as part of the cost of inventory to the listed
accounting treatment. a. Add to inventory cost
b. Subtract from inventory cost
c. Not an inventory cost
Freight costs incurred by the buyer to ship goods to its place of business
Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in
the following items:
a. LIFO
b. FIFO
Prices are declining; income taxes are higher with this method.
Match the following bond and long-term liability related terms to the appropriate
definition.
a. Long-term liability
b. Face value
c. Debenture bonds
d. Serial bonds
e. Callable bonds
f. Face rate of interest
g. Market rate of interest
h. Bond issue price
i. Premium
j. Discount
k. Effective interest method of amortization
l. Carrying value
m. Gain or loss on redemption
The excess of the issue price over the face value of bonds. It occurs when the face rate
on the bonds exceeds the market rate.
Convertible bonds normally sell at a higher price than non-convertible bonds.
a. True
b. False
Many companies report cash flow per common share on the statement of cash flows.
a. True
b. False
Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in
the following items:
a. LIFO
b. FIFO
Prices are declining; gross margin is higher with this method.
Match the selected items from a classified balance sheet and multiple-step income state
ment to the section in which they would appear on the classified balance sheetor the inc
ome statement.
a. Current Assets (balance sheet)
b. Property, Plant, & Equipment (balance sheet)
c. Current Liabilities (balance sheet)
d. Long-term Liabilities (balance sheet)
e. Stockholders’ Equity (balance sheet)
f. Operating Revenue (income statement)
g. Operating Expenses (income statement)
h. Other Revenue & Expenses (income statement)
i. Income Taxes (income statement)
Consulting revenues
Select where the following accounts would be reported on CocaÂCola’s financial
statements. (Select all that apply.)
Loss on sale of patent a. Balance Sheet-Property, Plant, and Equipment
b. Balance Sheet-Intangible Assets
c. Balance Sheet-Current Assets
d. Balance Sheet-Other Assets
e. Income Statement-Operating Section
f. Income Statement-Other Revenue and Expense Section
g. Statement of Cash Flows
When reconciling a bank account, the company must prepare an adjusting entry for
deposits in transit.
a. True
b. False
Pharma Corp.
The data presented below for Pharma Corp. is for the year ended December 31, 2015:
See the data for Pharma Corp. If Pharma Corp.uses the aging of accounts receivable
approach to estimate its bad debts, what will be the net realizable value of its accounts
receivable after the adjustment for bad debt expense?
a. $140,000
b. $156,000
c. $167,000
d. $184,000
The reason the allowance method of recognizing bad debts is used is primarily because
it recognizes the maximum amount of write-off in each period.
a. True
b. False
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 Sale of tires
Carlton Industries has identified the following items and would like you to answer a
few questions about their effect on Stockholders’ Equity. (Items are used only once.)
a. Preferred stock issued by Carlton
b. Amount received by Carlton in excess of par value when preferred stock was issued
c. Dividends in arrears on Carlton preferred stock
d. Cash dividend declared but unpaid on Carlton stock
e. Stock dividend declared but unissued by Carlton
f. Treasury stock
g. Amount received in excess of cost when treasury stock is reissued by MJ
h. Retained earnings
Which type of stock decreases stockholders’ equity?
When using the indirect method, how would the declaration and payment of cash
dividends be shown on the statement of cash flows?
a. Operating activities
b. Investing activities
c. Financing activities
d. Noncash investing and financing activity
Which method of inventory costing is not acceptable for financial accounting purposes?
a. Specific Identification
b. FIFO
c. LIFO
d. Replacement Cost
Hu Corporation Use the following Assets section of Hu Corporation’s balance sheets for
the years ended December 31, 2015 and 2014 to answer the questions that follow.HU
CORPORATION
Assets Section of Consolidated Balance Sheets (in millions)at December 31,
Hu Corporation recorded depreciation expense of $344 million for 2014
Refer to the information for Hu Corporation.
The difference between notes payable and accounts payable is.
is a line item on the income statement to reflect any gain or loss from an event that is
both unusual in nature and infrequent in occurrence.
Over the life of a note, the maker of a note recognizes ____________ on the balance
sheet and _____________ on the income statement.
With respect to operating assets, the two different transactions that would appear in the
investing activities category of the statement of cash flows are
_________________________________________________________________.
A(n)is a form the accounting department uses before making payment to document the
accuracy of all information about a purchase.
What are two difficulties that are encountered when two companies are compared?