Question 1 (2 points) A machine that cost $15,000 with a book value of $1,500 is sold for $1,900, and an entry is made. Which of the following is true about the entry? Question 1 options:

a)

Accumulated Depreciation is debited for $2,000.

b)

Machinery is credited for $1,500.

c)

Loss on Sale of Machinery is credited for $1,900.

d)

Accumulated Depreciation is debited for $13,500.

e)

None of these. Question 2 (2 points) On December 1, Neon Company signed a $100,000, 180 day, 6% note payable, with principal plus interest due on May 31 of the following year. What amount of interest expense should be accrued at December 31 on the note? Question 2 options:

a)

$50.

b)

$250.

c)

$500.

d)

$150. Question 3 (2 points) Baloo completed a major overhaul on a truck for his company that resulted in an extension in its useful life from five to Seven years. The proper entry to reflect this transaction includes a: Question 3 options:

a)

a debit to truck account d.

b)

a credit to Depreciation Expense.

c)

a debit to Maintenance Expense.

d)

None of these. Question 4 (2 points) Accounting gains and losses on the disposal of depreciable assets are determined by comparing: Question 4 options:

a)

the asset's book value and the net disposal proceeds.

b)

the original cost and the asset's book value.

c)

the original cost and the asset's replacement cost.

d)

the original cost and the net disposal proceeds. Question 5 (2 points) Which of the following depreciation methods is most commonly used? Question 5 options:

a)

Straight Line.

b)

Double Declining balance.

c)

Sum of the Years.

d)

Units of Production. Question 6 (2 points) Current liabilities would include all the following accounts with the exception of: Question 6 options:

a)

Sales tax payable.

b)

Wages payable.

c)

Wage expense.

d)

Interest payable. Question 7 (2 points) Which of the following costs is normally a capital expenditure? Question 7 options:

a)

Normal installation fees on a long-lived asset.

b)

Freight charges incurred on the purchased of new equipment.

c)

Interest charges during the active construction period of a new building.

d)

All of the above. Question 8 (2 points) Cogsworth Company acquired a site for the construction of a new plant. Which of the following costs should not be included in the Land account? Question 8 options:

a)

Surveying fees.

b)

Costs to clear and drain the property.

c)

Real estate commissions on the purchase of the property.

d)

Property taxes accruing after the plant is constructed.

e)

None of these. Question 9 (2 points) Which of the following methods is considered an accelerated depreciation method? Question 9 options:

a)

Straight Line.

b)

Double Declining balance.

c)

Sum of the Years.

d)

Units of Production. Question 10 (2 points) Gaston recently incurred costs associated with replacing the oil in one of its tractors. How should this cost be accounted for? Question 10 options:

a)

As a repair and maintenance expense.

b)

As an increase in the cost basis of the tractor.

c)

As a reduction of accumulated depreciation associated with the tractor.

d)

As an intangible.

e)

None of these. Question 11 (2 points) If a company truck that cost $12,000, with a book value of $10,000 is sold for $4,000, the sale would result in a: Question 11 options:

a)

Loss of $2,000.

b)

Gain of $4,000.

c)

Loss of $6,000.

d)

No loss or gain. Question 12 (2 points) When accounting for bonds as an issuer, the normal transactions to account for in order are: Question 12 options:

a)

Redemption, issuance & interest payments

b)

No accounting transactions required

c)

Interest payments, redemption and issuance.

d)

Issuance, interest payment & redemption Question 13 (2 points) Costs related to property, plant, and equipment which are incurred subsequent to acquisition should be added to an asset's depreciable base if the: Question 13 options:

a)

the service life of an asset is prolonged.

b)

the quantity of services expected from an asset is increased.

c)

the quality of services expected from an asset is improved.

d)

Any of the above choices. Question 14 (2 points) Sales tax payable is considered a: Question 14 options:

a)

Long term asset.

b)

Current liability.

c)

Payoll expense.

d)

Form of goodwill. Question 15 (2 points) Zippy Company purchased equipment for $24,000 with an estimated salvage value of $4,000. It also estimates a useful life of 5 years. If the company used the straight-line depreciation method the depreciation expense would be: Question 15 options:

a)

$2,000 each year.

b)

$5,000 each year.

c)

$4,800 each year.

d)

$4,000 each year. Question 16 (2 points) The frequency of bond interest payments are typically paid: Question 16 options:

a)

Semi-annually.

b)

Quarterly.

c)

Varies with each bond.

d)

Upon request of the bondholder. Question 17 (2 points) If Jigsaw company sold merchandise in a state where sales tax was assessed at 5% sold $1000 worth of merchandise, the entry to record this sale would include: Question 17 options:

a)

A debit to cash for $1,000.

b)

A credit to revenue of $1,050.

c)

A credit to sales tax payable of $50.

d)

All the above. Question 18 (2 points) A company that purchases another companys bonds will record the purchase as: Question 18 options:

a)

A current liability.

b)

A long-term asset.

c)

Property, plant and equipment.

d)

Goodwill. Question 19 (2 points) When a company disposes of a depreciable asset, depreciation is calculated based on the last year date of disposal. Question 19 options: a) True b) False Question 20 (2 points) A gain is recorded as: Question 20 options:

a)

on an exchange lacking commercial substance.

b)

when an asset is sold for less than its net book value.

c)

when an asset is sold for more than its net book value.

d)

when an asset is sold for cash.