Quiz Questions for Chapter 9

Quiz Questions for Chapter 9 1. A truck was getd for $25,000. It has a six- socio-economic class life and a $4,000 save treasure. Using straight-line wear and tear, what is the summations carrying evaluate ( entertain value) after 2 1/2 old age? a. $8,750. b. $12,250. c. $14,583. d. $16,250. 2. On January 1, 2003, gilt-edged Landscaping companion paid $17,000 to pervert a stump grinder. If well-made uses the grinder to remove 2,500 stumps per year, it would train an estimated useful life of 10 years and a salvage value of $4,500. The totality of dis rack upagement write down for the year 2003, using units-of-production depreciation and assuming that 3,500 stumps were removed, is a. 2,380. b. $1,750. c. $1,700. d. $1,250. 3. The sale for $2,000 of equipment that cost $8,000 and has compile depreciation of $6,700 would result in a a. gain of $2,000. b. gain of $700. c. button of $700. d. loss of $1,300. 4. Underestimating the number of tons of a mineral that can be ex ploit oer a mineral deposits life exit result in a. over tell net income each year. b. overdeclared get along totitions each year. c. over express depletion outlay each year. d. no arrange on total assets each year. 5. A copyright is obtained for what becomes a very in(predicate) book.The publisher expects the book to gene localize sales for 10 years. The copyright should be amortized over a. 2 to 4 years. b. 10 years. c. 40 years. d. the authors life plus 50 years. The avocation development pertains to the contiguous cardinal questions. Z society purchased an asset for $24,000 on January 1, 2004. The asset was expected to feature a four-year life and a $4,000 salvage value. 6. The bar of depreciation expense for 2006 using double-declining-balance would be a. $2,000. b. $3,000. c. $6,000. d. $12,000. 7. Assume that Z Company uses straight-line depreciation.If on January 1, 2007, Z Company sells the asset for $10,000, the tale of change flows would report a a. $1,000 funds inflow from gain on the sale of the asset in the operating(a) activities section. b. $10,000 hard currency inflow from an asset disposal in the commit activities section. c. $9,000 bills inflow from an asset disposal in the financing activities section. d. a and c. 8. On January 1, 2006, Fulsom Corporation purchased a machine for $50,000. Fulsom paid shipping expenses of $500 as well as installation costs of $1,200. Fulsom estimated the machine would have a useful life of ten years and an estimated salvage value of $3,000.If Fulsom records depreciation using the straight-line method, depreciation expense for 2007 is. a. $4,870. b. $5,170. c. $5,270. d. $5,570. 9. Hickory Ridge Company purchased degrade and a building for $920,000. The individual assets were appraised at the following grocery store value Land $614,400 Building $345,600 Recording the land in the story records would a. change magnitude land by $588,800. b. increase land by $614,400. c. increase assets by $920,000. d. Both a and c. 10 Penny Lane and Associates purchased a generator on January 1, 2006, for $6,300. The generator was estimated to have a five-year life and a salvage value of $600.At the beginning of 2008, the gild revised the expected life of the asset to six years and revised the salvage value to $300. Using straight-line depreciation, the depreciation expense recorded in 2008 would a. fall down assets and faithfulness by $1,140. b. devolve assets and equity by $930. c. decrease assets and equity by $1,005. d. decrease assets and equity by $1,500. 11 Which of the following disputations about good provide is authentic? a. The heart of goodwill is measured by subtracting the fall paid for assets from their fair marketplace value on the purchase date. b. The amount of goodwill is recorded as an asset. . Recording impairment of goodwill reduces the amount of net income. d. in all of the above. 12 XYZ Company paid interchange for a great expenditure that alter the operating efficiency of one of its assets. Which of the following reflects how this expenditure affects the companys monetary directions? a. b. c. d. 13 Assets = +- +- n/a Liab. n/a n/a n/a n/a + Equity n/a n/a n/a Rev. n/a n/a n/a n/a Exp. n/a n/a + n/a = Net Inc. n/a n/a n/a property ladder IA n/a OA n/a KLM Company experienced an tarradiddleing event that affected its financial statements as indicated downstairs Assets = Liab. n/a Equity Rev. n/a Exp. + = Net Inc. Which of the following events could have caused these do? a. recognizing depreciation. b. paying bullion for a capital expenditure. c. amortizing a patent. d. none of the above. change Flow OA 14. Which of the following correctly matches the type of long- call asset with the term used to identify how that assets cost is expensed? Building oil color Reserve Copyright a. Amortization dis comparabilityagement Depletion b. Depletion Amortization Depletion c. Amortization Depletion Depreciation d. D epreciation Depletion Amortization 15. Which of the following is true? . The book value of an asset is its estimated market value. b. The primary purpose of recording depreciation expense on the income statement is to reduce income tax expense. c. Recording depreciation expense decreases the book value of the asset in the year it was used to produce revenue. d. The collect deprecation for an asset provides the hard cash needed to replace the asset at the end of its useful life. Quiz Questions for Chapter 10 The following information pertains to the attached seven questions. On January 1, 2003, XYZ Corporation subject aread a $5,000 heart value confiscate that sold for 90.The impound had a five-year term and paid 10 percent yearly interest. The company used the proceeds from the impound issue to buy land. The land was leased for $600 of cash revenue per year and was sold at the end of the 5th year for $4,200 cash. 1. The carrying value of the bond liability on January 1, 200 3, would be a. $4,600. b. $4,500. c. $5,000. d. $4,000. 2. The amount of interest expense reported on the 2003 income statement would be a. $450. b. $400. c. $500. d. $600. 3. Interest expense reported on the income statement over the life of the bond would a. ncrease by $100 each year. b. decrease by $100 each year. c. be the same each year. d. equal the say ordain of interest. 4. The carrying value of the bond liability on December 31, 2007 would be a. $4,500. b. $5,000. c. $4,900. d. $4,600. 5. The sale of the land on December 31, 2007, would a. increase retained internet by $300. b. increase equity by $4,200. c. reduce net income by $300. d. have no effect on retained earnings. 6. The total amount of liability associated with the bond issue would a. increase each year as a result of the amortization of the discount. b. ecrease each year as a result of the amortization of the discount. c. remain the same each year. d. always be equal to the face value of the bond payable. 7. T he amount of the cash gush for interest expense in 2005 would be a. $600. b. $400. c. $500. d. $ 0. Use the following information to answer the next three questions. On January 1, 2003 , Keynes Company issued a $20,000 face value bond that sold for 110. The bond had a ten-year term and a utter one-year interest rate of 8 percent . 8. The carrying value of the bond liability on January 1, 2003, would be a. $20,000. . $22,000. c. $21,800. d. $20,200. 9. The amount of interest expense reported on the companys 2003 income statement would be a. $1,200. b. $1,400. c. $1,600. d. $1,050. 10. The amount of interest expense reported on the companys 2004 income statement would be a. $1,400. b. $1,600. c. $1,800. d. $2,000. 11. If a bond sells at a discount, which of the following is true? a. The market interest rate at the time of issue is great than the stated interest rate on the bond. b. The market interest rate at the time of issue is less than the stated interest rate on the bond. c.T he market interest rate at the time of issue is the same as the stated interest rate on the bond issue. d. The market interest rate is expected to increase above the stated interest rate on the bond. 12. On January 1, 2003, Ink, Inc. borrowed $100,000 cash from the Fidelity cant on a note that had a 6 percent annual interest rate and a five-year term. The loan is to be repaid in annual payments of $23,741. 69 on January 1 each year. The amount of the January 1, 2004, payment use to interest and to principal would be a. $6,000 / $94,000. b. $17,741. 69 / $94,000. c. $4,935. 0 / $82,258. 31. d. $6,000 / $17,741. 69. 13. Indigo Company can borrow up to $50,000 on its line of credit at the state bank. The company agrees to pay interest monthly at 2 percent above prime. Funds are borrowed or repaid on the offset day of each month. Month Jan. Feb. March Amounts Borrowed or (Repaid) $15,000 $ (5,000) $30,000 Prime send 6 percent 5 percent 4 percent The amount of interest to be accrued o n the March 31 is a. $225. 00. b. $100. 00. c. $133. 33. d. $200. 00. 14. XYZ Company experienced an counting event that affected its financial statements as indicated below Assets = Liab. + + Equity n/a Rev. n/a Exp. n/a = Net Inc. n/a Cash Flow + FA Which of the following events could have caused these effects? a. A bond issued at face value. b. A bond issued at a discount. c. A bond issued at a insurance premium. d. All of the above. 15. A bond will sell at a premium if a. The market rate of interest is equal to the bonds stated rate. b. The market rate of interest is greater than the bonds stated rate. c. The market rate of interest is less than the bonds stated rate. d. The bond is convertible into green personal credit line. Quiz Questions for Chapter 11 1.The ZZ Corporation had the following shares of declination gravid at December 31, 2003 Common Stock, $50 par value, 40,000 shares outstanding and Preferred Stock, 6 percent, $100 par value, cumulative, 10,000 shares o utstanding. Dividends for 2001 and 2002 were in arrears. On December 31, 2003, ZZ declared total cash dividends of $250,000. The total amounts payable to favourite(a) line of workholders and reciprocal stockholders, respectively, are a. $60,000 / $190,000. b. $120,000 / $130,000. c. $125,000 / $125,000. d. $180,000 / $70,000. Use the following information to answer the next four questions.The Kramer Company was started when it issued 200 shares of $5 par value general stock at a market damage of $20 per share. The company repurchased 10 shares at a market price of $15 per share. later(prenominal) the company reissued 5 shares at a market price of $20 per share. At the end of the first year of operations the companys equity included $1,200 of retained earnings in addition to its contributed capital. 2. The foundation to record the original issue of 200 shares of stock would a. increase cash by $4,000 / increase common stock by $4,000. b. ncrease cash by $4,000 / increase commo n stock and paid-in capital in excess of par value by $1,000 and $3,000, respectively. c. decrease cash by $4,000 / increase common stock common stock by $4,000. d. increase cash by $1,000 / increase common stock by $1,000. 3. The entry to record the purchase of the 10 shares of the companys own stock would a. decrease assets / decrease equity. b. decrease assets / increase equity. c. decrease assets / increase treasury stock. d. both a and c. 4. What effect would reissuing the 5 shares have on the companys paid-in capital from treasury stock transactions account? . No effect. b. Increase special paid-in capital by $100. c. Increase additional paid-in capital by $25. d. slump additional paid-in capital by $75. 5. The total amount of stockholders equity at the end of the first year would be a. $5,150. b. $5,200. c. $1,200. d. none of the above. 6. Which of the following is an prefer of the corporate form of business organization? a. double taxation. b. amount of regulation. c. l imited liability. d. entrenched management. 7. Jan Irving started a proprietorship on January 1, 2007 with a $1,000 cash role to the business.During the first year of operations the company generated $5,000 of cash revenue and incurred $2,000 of cash expenses. Also, Jan withdrew $500 from the business. At the end of 2007 the balance in the Jan Irving, Capital account was a. $1,000. b. $3,000. c. $3,500. d. $4,000. 8. ABC Company is authorized to issue 100,000 shares of common stock. The company issued 60,000 shares of common stock and later repurchased 15,000 shares of its own common stock. How many shares are outstanding? a. 60,000. b. 45,000. c. 100,000. d. 40,000. 9.An 8 percent stock dividend on 12,000 shares of outstanding preferred stock with a par value of $20 per share and a market value of $60 a share will have what effect on the accounting equation? a. Increase preferred stock by $57,600. b. Increase cash by $38,400. c. Decrease retained earnings by $19,200. d. Decrease r etained earnings by $57,600. 10. Which of the following statements concerning a two-for-one stock split is true? a. The number of shares outstanding will decrease. b. The market price of the stock would be expected to increase. c. The companys equity will increase. d. No journal entry would be necessary. 1. EFG Company paid cash to purchase treasury stock. Which of the following reflects how this event affects the companys financial statements? a. b. c. d. 12. Assets +- +- = Liab. n/a n/a n/a n/a + Equity n/a n/a Rev. n/a n/a n/a n/a Exp. n/a n/a + + = Net Inc. n/a n/a Cash Flow FA OA FA OA ZGAR Company distributed a stock dividend. Which of the following reflects how this event affects the companys financial statements? a. b. c. d. Assets n/a n/a = Liab. n/a n/a n/a n/a + Equity +- +- Rev. n/a n/a n/a n/a Exp. n/a n/a + n/a = Net Inc. n/a n/a n/a Cash Flow n/a n/a FA FAQuiz for Chapter 12 1. Which of the following cash transactions is classified as an commit op eration on the statement of cash flows? a. Cash borrowed. b. Cash received from issuing stock. c. Cash received from revenue. d. Cash collected on a loan. 2. A building costing $55,000 with $16,500 of accumulated depreciation was sold for $40,000. How would the cash flow from the sale take care on the statement of cash flows? a. $1,500 in operating activities and $38,500 in investment activities. b. $40,000 in financing activities. c. $38,500 noncash financing and investing activities and $1,500 in operating activities. . $40,000 in investing activities. 3. The owners of X Company invested $2,000 in the company. X Company used the cash to invest in Y Company. On Xs statement of cash flows these transactions would be classified, respectively, as a. an investing activity and an investing activity. b. a financing activity and a financing activity. c. an investing activity and a financing activity. d. a financing activity and an investing activity. 4. outcome a note for the purchase of land is an example of a. an investing activity. b. a financing activity. c. a noncash investing and financing activity. d. transaction that would not appear on the statement of cash flows. 5. The sum of the three major components (operating activities, investing activities, and financing activities) on a statement of cash flows will add up to a. the ending cash balance. b. the change in the cash account balance between the beginning and ending of the period. c. the amount of cash inflow for the period. d. net income for the period. Answers Chapter 9 D, B, B, C, B, A, B, A, D, B, D, A, D, D, C Chapter 10 B, D, C, B, C, A, C, B, B, A, A, D, D, D, C Chapter 11 D, B, D, C, A, C, C, B, D, D, A, B Chapter 12 D, D, D, C, B