Question 1: A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:
a. 2 years.
b. 5 years.
c. 7 years.
d. 10 years.
Question 2: Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. On July 10, Newton received a check for the full amount of $3,000 from Best. On July 10, the entry or entries Newton makes to record the recovery of the bad debt is:
a. Accounts Receivable - P. Best...................................3,000
Allowance for Doubtful Accounts...................................3,000
Cash...........................................................3,000
Accounts Receivable - P.Best.....................................3,000
b. Cash......................................................3,000
Bad Debts Expense...........................................3,000
c. Accounts Receivable -P.Best.....................................3,000
Bad Debts Expense...............................................3,000
Cash..........................................................3,000
Accounts Receivable - P. Best...................................3,000
Cash......................................................3,000
d. Accounts Receivable - P. Best.......................3,000
Question 3:
When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:
a.$ 5,375.00.
b.$ 2,687.50.
c.$ 5,543.75.
d.$10,750.00.
Question 4: A credit sale of $3,275 to a customer would result in:
a.A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.
b.A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger.
c.A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger.
d.A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.
Question 5: Pepsi's accounts receivable turnover was 9.9 for this year and 11.0 for last year. Coke's turnover was 9.3 for this year and 9.3 for last year. These results imply that:
a.Coke has the better turnover for both years.
b.Pepsi has the better turnover for both years.
c.Coke's turnover is improving.
d.Coke's credit policies are too loose
Question 6: A company has net sales of $900,000 and average accounts receivable of $300,000. What is its accounts receivable turnover for the period?
a.0.20.
b..5.00
c.20.0
d.3.0
Question 7: A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals:
a.0.13
b.0.80
c.7.75
d.8.00
Question 8: A total asset turnover ratio of 3.5 indicates that:
a.For every $1 in sales, the firm acquired $3.50 in assets during the period.
b.For every $1 in assets, the firm produced $3.50 in net sales during the period.
c.For every $1 in assets, the firm earned gross profit of $3.50 during the period.
d.For every $1 in assets, the firm earned $3.50 in net income.
Question 9: Depletion:
a.Is the process of allocating the cost of natural resources to periods in which they are consumed.
b.Is also called depreciation.
c.Is also called amortization.
d.Is an unrealized expense reported in equity.
Question 10: A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is:
a.$0.75.
b.$0.625.
c.$0.875.
d.$6.00.