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Question 1

Which of the following most likely would be classified as a current liability?

Answer 1

Salaries Payable

Question 2

Which of the following is a tax paid by the employee but not the employer?

Answer 2

State income tax

Question 3

Recording estimated product warranty expense in the year of the sale best follows which of the following accounting principles?

Answer 3

matching

Question 4

A contingent liability is recorded as a journal entry in the accounting records…

Answer 4

If it is probable that it will become an actual liability and the amount can be reasonably estimated

Question 5

A repair to an appliance under warranty occurs within the warranty period. What adjustment is made?

Answer 5

Warranty Liability is debited

Question 6

Computing Magazine receives $90 in advance from a customer for 3 year subscription. Computing Magazine’s entry to record the receipt of funds would include a:

Answer 6

Credit to unearned subscription revenue for $90

Question 7

Which of the following assets is not subject to depreciation, depletion, and amortization?

Answer 7

Land

Question 8

The book value or carrying value of an asset is defined as

Answer 8

Cost less accumulated depreciation

Question 9

The depreciable cost of an asset is

Answer 9

Original cost minus accumulated depreciation

Question 10

Which of the following is irrelevant in computing a machine’s depreciation expense using the units-of-production method?

Answer 10

Estimated useful life in years

Question 11

An asset that cost 24,000 and has accumulated depreciation of 18,000 is sold for 5,200. The entry to record the sale would include a

Answer 11

Debit to Loss on Sale of Asset $800

Question 12

The term used for allocating the cost of an intangible asset to the periods it benefits is

Answer 12

Amortization

Question 13

Accrued interest on a short-term note payable is recorded by

Answer 13

Debiting Interest Expense and Crediting Interest Payable

Question 14

Potential Liabilities on short-term note payable is recorded by

Answer 14

Contingent Liabilities

Question 15

A revenue expenditure usually results in debit to an

Answer 15

Expense Account

Question 16

A gain is recorded on the sale of a plant asset when

Answer 16

The asset is sold for price greater than the asset’s book value

Question 17

Long-term debt generally includes

Answer 17

Obligations that extend beyond one year

Question 18

A convertible bond is one where

Answer 18

The bondholder can convert the bond into common stock at a future time

Question 19

If a company’s bonds are callable

Answer 19

The issuing company is likely to retire the bonds before maturity if the bonds are paying 8% interest while the market rate of interest is 4%

Question 20

Which of the following terms does not describe the interest rate printed on the bond certificate?

Answer 20

effective rate

Question 21

If bonds were initially issued at a discount, the carrying value of the bond on the issuer’s books will

Answer 21

Increase as the bonds approach their maturity date

Question 22

The Collins Company sold 200,000 of 10-year bonds for $190,000. The stated rate on the bonds was 8% and interest is paid annually on Dec. 31. What entry would be made on Dec 31 when the interest is paid?

Answer 22

Interest Expense

Discount on Bonds Payable

Question 23

When will bonds sell at discount?

Answer 23

The started rate of interest is less than yield/market rate of interest at the time of issue

Question 24

GAAP requires that research and development costs to develop a new product be

Answer 24

Expense in the period incurred

Question 25

Stasia Inc. has a weekly payroll of $8,000 for 5-day work week beginning each Monday and ending each Friday. Stasia’s year-end December 31st, if December 31st falls on a Wednesday, Stasia would make an adjustment entry to

Answer 25

Increase wages expense by $4,800

Question 26

Which of the following is not an advantage of issuing long-term debt?

Answer 26

the risk of being bankrupt is reduced