1)
Carpenter Transport Company purchased a truck at a cost of $60,000 on January 1,
2010. The truck has an estimated useful life of 9 years and a $15,000 residual value.
A. How much depreciation expense should be reported for the year 2014?
B. What is the total amount of accumulated depreciation at December 31, 2014?
C. Show how the truck and the related accumulated depreciation would appear on
Carpenters December 31, 2014, balance sheet immediately after the adjustments are
recorded and posted.
D. Is the amount on the balance sheet what the truck could probably be sold for on
December 31, 2014? What principle governs?
E. How much depreciation expense should be reported for the year 2015?
2) Schneider, Inc., a manufacturer of tires, has given you its most recent annual report
in an effort to obtain a sizable loan. The company is very profitable and appears to have
a sound financial position. Based on a report presented on prime-time television last
night, you are aware that Schneider is a defendant in several lawsuits related to its
defective tires that cause vehicles to overturn. The information presented on television
is an example of financial information that is
A.Relevant
B.Consistent
C.Predictable
D.Comparable
3) Which method might allow a company to make significant inventory purchases at
year end for the purpose of manipulating income?
A.FIFO
B.LIFO
C.Specific Identification
D.Weighted Average Cost
4) Many companies assign only the net invoice price for merchandise to inventory and
cost of goods sold. All other costs, including transportation and other costs of bringing
merchandise to the place of business, are charged to expense of the period in which they
are incurred. Which accounting principle or concept is applied in this example?
A.Historical cost
B.Matching
C.Cost/Benefit
D.Conservatism
5) Which of the following statements would be true if you own stock in a company?
A.You are an owner of the retained earnings and capital stock of the company
B.You have a claim to the assets of the business
C.You have the right to receive interest on an annual basis
D.You have the right to a portion of the companys revenues each accounting period
6) What happens to the accounting equation when the adjustment that recognizes
accrued interest revenue is recorded?
A.Assets increase and liabilities increase
B.Assets increase and stockholders equity increases
C.Assets decrease and liabilities decrease
D.Stockholders equity increases and decreases by the same amount
7) The correct term for the process of recording the economic effects of business
transactions in a book of original entry is
A.Double-entry system
B.Debit
C.Credit
D.Journalizing
8) The Dinho Corporation identified the following data when preparing their April bank
reconciliation:
In addition, Dinho incorrectly recorded a deposit in its books in the amount of $1,000.
The correct amount was recorded by the bank as $1,200.
What is the adjusted cash balance at the end of April?
A.$44,300
B.$45,500
C.$45,000
D.$45,700
9) Below are several accounts from Costello Company’s accounting records. Answer
the questions that follow.
A) How much is the balance of retained earnings at the end of the year?
B) Show the accounting equation for Costello Company at the end of the year with the
respective dollar amounts.
C) If stockholders equity increases during the year, does that mean that the company is
profitable? Explain your answer.
10) Tarkington Beers, Inc. purchased the most popular and well-known pub in a college
town. Its purchase price was $1,200,000. The appraisers determined that the land should
be valued at $400,000, the building at $500,000 and the equipment at $200,000. Which
of the following statements is correct?
A.Tarkington Beers, Inc. should record only the appraised value of the assets
B.Tarkington Beers, Inc. needs to adjust the value of the assets in proportion to their
appraised value so that the total of the assets equals the purchase price
C.Tarkington Beers, Inc. paid too much for the business and needs to record a loss
D.Tarkington Beers, Inc. needs to record goodwill of $100,000.
11) If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on
March 3 and pays March 12, then the amount paid to the seller would be
A.$3,136
B.$3,150
C.$3,168
D.$3,200
12) Walker Company purchased a truck on May 31, 2011 for $70,000. The equipment
has an estimated useful life of five years. What amount will appear on Walker
Company’s balance sheet for total accumulated depreciation at May 31, 2014?
A.$14,000
B.$35,000
C.$42,000
D.$28,000
13) Which of the following statements is true?
A.Only the effects of internal transactions must be recognized and recorded in the
entity’s accounting system
B.An internal event is a transaction between an entity and its environment
C.Not all recognizable events are supported by a standard source document
D.Only the effects of external events must be recognized, measured, and recorded in an
entity’s accounting system
14) Which of the following transactions involves an accrued asset?
A.Wages earned by employees but not yet paid
B.Rent collected in advance from a tenant
C.Rent owed by a tenant but not yet collected
D.One years premium on life insurance policy paid in advance
15) Which one of the following documents is used in the control of cash receipts?
A.Purchase requisitions
B.Receiving reports
C.Canceled checks from customers
D.Bank deposit slips
16) Ficus Company calculated the following amounts concerning its financial
information for the years ending December 31, 2014 and 2013:
REQUIRED:
Suppose Ficus Company had a decrease in its cash account from 2013 to 2014. Would
the other current asset amounts have increased or decreased? Explain.
17) A company purchased an asset on January 1, 2012, for $10,000. The asset was
expected to
have a ten-year life and a $1,000 salvage value. The company uses the straight-line
method of
depreciation. On January 1, 2014, the company made a major repair to the asset of
$5,000,
extending its life. The asset is expected to last ten years from January 1, 2014
Calculate the amount of depreciation for 2014
18) On the statement of cash flows, the ______________________________ section
involves the acquisition and sale of long-term assets.
19) Provide at least three source documents and the related event for which each would
provide the evidence to record.
20) For each of the following sentences 3-10, select the word or group of words that
best completes the statement.
A(n) _________________________ results when cash is paid before the related
amount is reported on the income statement.
21) A firms year ends on December 31. Its tax is computed and submitted to the U.S.
Treasury on March 15 of the following year. When should the taxes be reported as a
liability?