On January 1, 2013, Zane Manufacturing Company purchased a machine for $40,000. The company expects to use the machine a total of 24,000 hours over the next 6 years. The estimated sales price of the machine at the end of 6 years is $4,000. The company used the machine 8,000 hours in 2013 and 12,000 in 2014.
1. What is the book value of the machine at the end of 2014 if the company uses straight-line depreciation?
$10,000
$28,000
$17,778
$20,000
2. Which of the following describes the internal control procedure separation of duties?
Cashiers must not have access to accounting records.
External auditors will monitor internal controls.
The information system is critical.
Prenumber invoices and other documents.
3. Which of the following is NOT one of the purposes of internal control?
To encourage employees to follow company policy
To safeguard the company's assets
To ensure accurate, reliable accounting records
To guarantee that a business makes a profit
4. Argon Company had excess cash which it wished to invest for about 6 months. On October 1, 2011, Argon purchased 1,000 shares of AmeriChem at $20 per share. (AmeriChem has 800,000 shares of common stock issued and outstanding.) On November 1, AmeriChem paid out dividends of $0.45 per share. Which of the following describes the journal entry needed on the books of Argon Company to record the receipt of the dividends?
Debit Cash, credit Investment
Debit Dividends, credit Cash
Debit Sales revenue, credit Cash
Debit Cash, credit Dividend revenue
5. Which of the following should be included in the cost of land?
Cost to build sidewalks on the land
Cost to clear the land of old buildings
Cost of installing signage
Cost of installing fences