Unit 4 : Unit 4: Reporting and Analyzing Receivables and Long-Term Assets – Quiz

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Unit Quiz due less than an hour, Please help!

Question 1. 1.A promissory note received from a customer in exchange for an account receivable:(Points : 2)

Is a cash equivalent for the recipient
Is an account receivable for the recipient
Is a note receivable for the recipient
Is a short-term investment for the recipient
Is a note payable for the recipient

Question 2. 2.A credit sale of $2,500 to a customer would result in:(Points : 2)

A debit to the Accounts Receivable account in the general ledger and a debit to the customer’s account in the accounts receivable ledger
A credit to the Accounts Receivable account in the general ledger and a credit to the customer’s account in the accounts receivable ledger
A debit to the Accounts Receivable account in the general ledger and a credit to the customer’s account in the accounts receivable ledger
A credit to the Accounts Receivable account in the general ledger and a debit to the customer’s account in the accounts receivable ledger
A credit to Sales and a credit to the customer’s account in the accounts receivable ledger

Question 3. 3.Amortization:(Points : 2)

Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life
Is the process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use
Is the process of allocating the cost of natural resources to periods when they are consumed
Is an accelerated form of expensing an asset’s cost
Is the same as depletion

Question 4. 4.A company had a bulldozer destroyed by fire. The bulldozer originally cost $125,000. The accumulated depreciation on it was $60,000. The proceeds from the insurance company were $90,000. The company should recognize:(Points : 2)

A loss of $25,000
A gain of $25,000
A loss of $65,000
A gain of $65,000
A gain of $90,000

Question 5. 5.A company has net sales of $870,000 and average accounts receivable of $174,000. What is its accounts receivable turnover for the period?(Points : 2)

0.20
5.00
20.0
73.0
1,825

Question 6. 6.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:(Points : 2)

$0.75
$0.625
$0.875
$6.00
$8.00

Question 7. 7.The person who signs a note receivable and promises to pay the principal and interest is the:(Points : 2)

Maker
Payee
Holder
Receiver
Owner

Question 8. 8.A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company’s total asset turnover is equal to:(Points : 2)

0.82
0.90
1.09
1.11
1.26

Question 9. 9.The interest accrued on $3,600 at 7% for 60 days is:(Points : 2)

$36
$42
$252
$180
$420

Question 10. 10.A copyright:(Points : 2)

Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years
Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 17 years
Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 50 years
Is the amount by which the value of a company exceeds the fair market value of a company’s net assets if purchased separately
Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years

Question 11. 11.On August 1, 2010, Ace Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $123,965. The note is due in 90 days and has an interest rate of 8%. What would be the total amount collected at the maturity date?(Points : 2)

$123,965.00
$2,479.30
$126,444.30
$121,485.70
$133,882.20

Question 12. 12.A depreciation method that produces larger depreciation expense during the early years of an asset’s life and smaller expense in the later years is a(n):(Points : 2)

Accelerated depreciation method
Book value depreciation method
Straight-line depreciation method
Units-of-production depreciation method
Unrealized depreciation method

Question 13. 13.Plant assets are:(Points : 2)

Tangible assets used in the operation of a business that have a useful life of more than one accounting period
Current assets
Held for sale
Intangible assets used in the operations of a business that have a useful life of more than one accounting period
Tangible assets used in the operation of business that have a useful life of less than one accounting period

Question 14. 14.Depletion:(Points : 2)

Is the process of allocating the cost of natural resources to periods in which they are consumed
Is also called depreciation
Is also called amortization
Is an unrealized expense reported in equity
Is the process of allocating the cost of intangibles to periods in which they are used

Question 15. 15.Revenue expenditures:(Points : 2)

Are additional costs of plant assets that do not materially increase the asset’s life or its productive capabilities
Are known as balance sheet expenditures
Extend the asset’s useful life
Substantially benefit future periods
Are debited to asset accounts

Question 16. 16.Extraordinary repairs:(Points : 2)

Are revenue expenditures
Extend an asset’s useful life beyond its original estimate
Are credited to accumulated depreciation
Are additional costs of plant assets that do not materially increase the asset’s life
Are expensed as incurred

Question 17. 17.A leasehold:(Points : 2)

Is a short-term rental agreement
Is the same as a patent
Are the rights granted to the lessee by the lessor of a lease
Is recorded as rent expense
Is an investment asset

Question 18. 18.Depreciation:(Points : 2)

Measures the decline in market value of an asset
Measures physical deterioration of an asset
Is the process of allocating to expense the cost of a plant asset
Is an outflow of cash from the use of a plant asset
Is applied to land

Question 19. 19.The useful life of a plant asset is:(Points : 2)

The length of time it is used productively in a company’s operations
Never related to its physical life
Its productive life, but not to exceed one year
Determined by the FASB
Determined by law

Question 20. 20.The buyer who pays cash for an account receivable referred to as a:(Points : 2)

Payor
Pledgor
Factor
Payee
Pledgee

Question 21. 21.An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period of the sales and (2) reports accounts receivable at the amount of cash to be collected is the:(Points : 2)

Allowance method of accounting for bad debts
Aging of notes receivable
Adjustment method for uncollectible debts
Direct write-off method of accounting for bad debts
Cash basis method of accounting for bad debts

Question 22. 22.A company’s annual accounting period ends on September 30. During the current year a depreciable asset which cost $16,000 was purchased on January 1. The asset has a $2,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 4-year life. What is the total depreciation expense for the current year?(Points : 2)

$4,000
$3,000
$3,500
$2,625
$875

Question 23. 23.A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:(Points : 2)

Direct write-off method
Aging of accounts receivable method
Percentage of sales method
Aging of investments method
Percent of accounts receivable method

Question 24. 24.Many companies use accelerated depreciation in computing taxable income because:(Points : 2)

It is required by the tax rules
It is required by financial reporting rules
It postpones tax payments until later years and the company can use the resources now to earn additional income before payment is due
Using it causes a company to use higher income in the early years of the asset’s useful life
The results are identical to straight-line depreciation

Question 25. 25.Failure by a promissory note’s maker to pay the amount due at maturity is known as:(Points : 2)

Protesting a note
Closing a note
Dishonoring a note
Discounting a note
Depreciating a note

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