1) A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $3,000, would have a cost basis of A. $93,000 B. $90,000 C. $82,000 D. $85,000
2) A company uses the allowance method to account for uncollectible accounts receivables. When the firm writes off a specific customer's account receivable
A. total current assets are reduced
B. total expenses for the period are increased
C. net realizable value of accounts receivable increases
D. there is no effect on total current assets or total expenses
3) Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of net credit sales. If net credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivables is
A. $8,500
B. $8,500
C. $9,000
D. Cannot be determined
4) The accumulated depletion account is
A. an expense account
B. an intangible asset account
C. reported on the income statement as other expense
D. reported on the balance sheet as a deduction from the cost of the mineral deposit
5) The direct write-off method of accounting for uncollectible accounts
A. emphasizes balance sheet relationships.
B. is often used by small companies and companies with few receivables.
C. emphasizes cash realizable value.
D. emphasizes the matching of expenses with revenues.
6) A debit balance in the Allowance for Doubtful Accounts
A. is the normal balance for that account.
B. indicates that actual bad debt write-offs have been less than what was estimated.
C. cannot occur if the percentage of receivables method of estimating bad debts is used.
D. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.
7) Interest on a note can be calculated without knowledge of the
A. fair value of the note
B. rate of interest
C. notes duration
D. principal amount
8)A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?
A. $2,000 loss
B. $1,500 loss
C. $3,500 gain
D. $2,000 gain\