Multiple choice question based on basic financial accounting.
1.Which inventory method produces the highest net income in a time of rising costs?
a. FIFO.
b.Average Cost.
c.LIFO.
d.KIFO.
2.Which of the following should be included in the cost of land?
a.construction cost of a parking lot
1.landscaping
2.real estate brokerage commission
3.lighting
3.Which of the following statements is false?
a. depreciation is a process of subjective valuation.
b. depreciation is a non-cash expense.
c. accumulated depreciation represents a growing amount of cash to be used to replace the existing asset.
d. accumulated depreciation is that portion of a plant asset\'s cost that has been recorded previously as an expense.
4.On January 10, 2007, Maxim Corporation acquired equipment for $124,000. The estimated life of the equipment is 3 years or 24,000 hours. The estimated residual value is $10,000. What is the depreciation for 2007, if Baldwin Corporation uses the asset 9,100 hours and uses the units-of-production method of depreciation?
a.$43,225
1.$47,017
2.$41,333
3.$38,000
5.A loss is recorded on the sale of a plant asset when the:
a.cash received exceeds the asset's book value.
1.asset's book value is less than its historical cost.
2.asset's book value is greater than the amount of cash received from the sale.
3.cash received exceeds the cash paid for the replacement asset.
6.Current liabilities are obligations due within:
1.one month or within the company's normal operating cycle if it is longer than one month.
2.one year or within the company's normal operating cycle if it is longer than one year.
3.one year or within the company's normal operating cycle if it is shorter than one year.
4.one month or within the company's normal operating cycle if it is shorter than one month.
7.The entry to record common stock issued at its par value includes a:
1.debit to the common stock account.
2.debit to retained earnings.
3.credit to the common stock account.
4.credit to retained earnings.