1) machinery was purchased for $85,000 on january 1, 2011. freight charges amounted
to $3,500 and there was a cost of $10,000 for building a foundation and installing the
machinery. it is estimated that the machinery will have a $15,000 salvage value at the
end of its 5-year useful life. what is the amount of accumulated depreciation at
december 31, 2012, if the straight-line method of depreciation is used?
a.$33,400
b.$16,700
c.$14,300
d.$28,600
2) the authorized stock of a corporation
a.only reflects the initial capital needs of the company
b.is indicated in its by-laws
c.is indicated in its charter
d.must be recorded in a formal accounting entry
3) the cash account has a credit balance. which statement is true?
a.this is the normal balance for cash.
b.an error has occurred and must be corrected before financial statements can be
prepared.
c.the account needs to be analyzed to determine the reason for the credit balance.
d.debit postings exceed the credit postings for the accounting period.
4) the contractual rate of interest is usually stated as a(n)
a.monthly rate
b.daily rate
c.semiannual rate
d.annual rate
5) which of the following statements concerning taxation is accurate?
a.partnerships pay state income taxes but not federal income taxes
b.corporations pay federal income taxes but not state income taxes
c.corporations pay federal and state income taxes
d.only the owners must pay taxes on corporate income
6) during the year, sarahs pet shops merchandise inventory decreased by $30,000. if the
companys cost of goods sold for the year was $450,000, purchases would have been
a.$480,000
b.$420,000
c.$480,000
d.unable to determine
7) hoosher enterprises purchased an 18-month insurance policy on may 31, 2011 for
$5,400. the december 31, 2011 balance sheet would report prepaid insurance of:
a.$0 because prepaid insurance is reported on the income statement.
b.$2,100
c.$3,300
d.$5,400
8) which of the following errors, each considered individually, would cause the trial
balance to be out of balance?
a.a payment of $148 to a creditor was posted as a debit to accounts payable and a debit
of $148 to cash.
b.cash of $530 received from a customer on account was posted as a debit of $350 to
cash and as a credit of $350 to accounts payable.
c.a payment of $59 for supplies was posted as a debit of $95 to supplies and a credit of
$95 to cash.
d.a transaction was not posted.
9) oakville inc. purchased a 12-month insurance policy on march 1, 2011 for $1,200. at
march 31, 2011, the adjusting journal entry to record expiration of this asset will
include:
a.a debit to prepaid insurance and a credit to cash for $1,200
b.a debit to prepaid insurance and a credit to insurance expense for $120
c.a debit to insurance expense and a credit to prepaid insurance for $100
d.a debit to insurance expense and a credit to cash for $100
10) a $10,000, 8%, 10-year note payable that pays interest quarterly would be
discounted back to its present value by using tables that would indicate which one of
the following period-interest combinations?
a.10 interest periods, 8% interest
b.40 interest periods, 8% interest
c.40 interest periods, 2% interest
d.10 interest periods, 2% interest