IFRS allows companies to revalue plant assets to fair value. Which of the following
statements is correct regarding revaluation?
a.At the time a company purchases an asset it must decide whether to follow
revaluation procedures for the asset; once the election is made, it must be followed for
the remainder of the asset’s useful life.
b.Assets that are experiencing rapid price changes must be revalued quarterly, other
assets can be revalued on an annual basis.
c.The journal entry to record a revaluation when the asset’s price has increased includes
a credit to the account revaluation surplus.
d.All of these answer choices are correct.
The entry to record the receipt of payment within the discount period on a sale of $700
with terms of 2/10, n/30 will include a
a.credit to Sales Discounts for $14.
b.debit to Sales Revenue for $686.
c.credit to Accounts Receivable for $700.
d.credit to Sales Revenue for $700.
Which statement is incorrect?
a.Periodic inventory systems provide better control over inventories than perpetual
inventory systems.
b.Computers and electronic scanners allow more companies to use a perpetual
inventory system.
c.Freight-in is debited to Inventory when a perpetual inventory system is used.
d.Regardless of the inventory system that is used, companies should take a physical
inventory count.
Mary Richardo has performed $500 of CPA services for a client but has not billed the
client as of the end of the accounting period. What adjusting entry must Mary make?
a.Debit Cash and credit Unearned Service Revenue
b.Debit Accounts Receivable and credit Unearned Service Revenue
c.Debit Accounts Receivable and credit Service Revenue
d.Debit Unearned Service Revenue and credit Service Revenue
Karcan, Inc. purchased supplies costing 2,500 on January 1, 2014 and recorded the
transaction by increasing assets. At the end of the year 1,100 of the supplies are still on
hand. If Karcan, Inc. does not make the appropriate adjusting entry, what is the impact
on its statement of financial position at December 31, 2014?
a.Assets overstated by 1,400.
b.Equity understated by 1,400.
c.Equity overstated by 1,100.
d.Assets overstated by 1,100.
U.S. standards are developed by the
a.IFRS.
b.GAAP.
c.IASB.
d.FASB.
The current carrying value of Kennett’s $600,000 face value bonds is $597,750. If the
bonds are retired at 102, what would be the amount Kennett would pay its bondholders?
a.$597,750
b.$600,000
c.$603,000
d.$612,000
Schrock Company purchases a new delivery van for $60,000. The sales taxes are
$4,500. The logo of the company is painted on the side of the van for $1,200. The van’s
annual license is $120. The van undergoes safety testing for $220. What does Schrock
record as the cost of the new van?
a.$66,040.
b.$65,920.
c.$64,500.
d.$63,920.
A $100 petty cash fund has cash of $10 and receipts of $80. The journal entry to
replenish the account would include a credit to
a.Cash for $90.
b.Petty Cash for $90.
c.Cash Over and Short for $10.
d.Cash for $80.
On January 1, Sewell Corporation issues $2,000,000, 5-year, 12% bonds at 96 with
interest payable on January 1. The entry on December 31 to record accrued bond
interest and the amortization of bond discount using the straight-line method will
include a
a.debit to Interest Expense, $120,000.
b.debit to Interest Expense, $240,000.
c.credit to Discount on Bonds Payable, $16,000.
d.credit to Discount on Bonds Payable, $8,000.
The following information is available for Patterson Company:
The accounts receivable turnover for 2014 is
a.8.3 times.
b.4.3 times.
c.8.6 times.
d.7.6 times.