Financial Accounting Final Review

what is amount recorded as the cost of equipment?

$69,600

the cost of the land is?

$82,000

which of these is not a consideration when recording depreciation expense on plant assets?

cash needed to replace the plant asset

in computing depreciation, salvage value is

an estimate of the plant asset's value at the end of its useful life

the book value of an asset is equal to the

asset's cost less accumulated depreciation

management should select the depreciation method that

best measures the asset's contribution to revenue over its useful life

if a plant asset is retired when it is fully depreciated and no salvage value is received

neither a gain or loss occurs

a gain or loss on disposal of a plant asset is determined by comparing the book value to the original cost

false

ABC Co discards a truck that was bought for $30000 and has accum depreciation of $27000. The jnl entry on disposal will

debit accum depreciation for 27,000

a current liability is a debt that is expected to be repaid within 1 year or the operating cycle, whichever is longer

true

A bank agrees to lend Apex $608,000 on 1/1. Apex signs a $608000 9% 9month note. The entry made by Apex on 1/1 includes

a debit to cash for 608,000

the expected value of an asset at the end of its useful life is called

residual value

Sun Bank lends Apex $597000 on 1/1. Apex signs an 8% 9month note. The adjusting entry on June 30 includes

a debit to interest expense of $23,880

sales taxes collected by a retailer are recorded by debiting sales tax expense

false (sales tax question)

A cash register tape shows cash sales of $1807 and sales tax of 117. The journal entry to record this activity

includes a credit to revenue of $1807

bonds that may be exchanged for common stock at the option of the bondholder is called a debenture bond

false (debenture question)

if the market rate of interest is 10%, a 8% 10 year bond that pays interest annually would sell at an amount

less than face value

when a company receives interest income on bond investment, interest revenue is debited

false (interest rev question)

an equity security

represents stock ownership in another company and may pay dividends

if bonds sell at a discount, it means that the market rate of interest is higher than the contractual rate

true (discount bonds question)

which of the following is not an advantage of the corporate form of organization?

government regulation

sharing in the corporate earnings is a right of a stockholder in a corporation

true (sharings question)

sharing in the assets upon liquidation is an ownership right of a shareholder in a corporation

true

declaring dividends is an ownership right of a shareholder in a corporation

false (declaring divendend question)

if stock is issued for a noncash asset, the asset should be recorded on the books of the company at

fair market value

if common stock is issued for an amount more than par value, the excess should be credited to

paid in capital in excess of par

dividends become a legally binding obligation of the company on the date of record

false (legally binding question)

on the dividend payment date, the dividend account is debited

false (payment date question)

the order of the cash flow statement is

operating, investing, financing (OIF)

a significant noncash transaction would not include

a treasury stock acquistion

what section of the balance sheet will you find goodwill?

intangibles (goodwill)

what section of the balance sheet will you find building?

property, plant and equipment

what section of the balance sheet will you find franchises?

intangibles

what section of the balance sheet will you find research and development costs?

not on balance sheet

bonds subject to redemption/buy back at a stated amount prior to maturity at the option of the issues are called

callable bonds

bonds that can be exchanged for common stock of the company at the bondholder's request

convertible bonds

difference between the face value of a bond and its price when the bond is sold for less than face value is a discount

true (face value question)

the allocation of the cost of an intangible asset to expense over its useful life is depreciation

false

the amount of stock a corporation can sell as indicated in its charter

authorized stock

unearned revenue for services to be performed in seven months appears on the BS as a

current liability

A $41,000, 3 month 10% note payable was issued 12/1/25. What is the amount of acc int on Dec 31, 2025?

342

Lana sells washers w a 4 yr warranty. Sales were $98,000. Lana estimates warranty at 4.5% of revenue. Warranty exp is?

4,410

which of the following is proper treatment for a probably contingency when exact amt is not known?

estimate the liability and record it

the amount a borrower must pay back to the bondholders at maturity

principal amount

Adams Co received cash from issuing 33 shares of CStk at par on 1/1/25. Par is $2/sh. What is the jnl entry to record?

debit cash and credit common stock for $66

Sales for a store were 527,000. All sales are on acct and subject to 13% sales tax. The entry to record the sales txns

would have a debit to AR for 595,510

Gold sells insurance policies for $100 paid in advance. During Oct, 10 policies were sold for cash.The jnl entry would be

debit cash and credit unearned income for 1,000

On 1/1/26 Simon issues $21000 8%, 10 yr bonds at face value. The journal entry is

debit cash credit bonds payable for 21, 000

State issues 8% 10 yr bonds on 3/21/17. The bonds pay int on 3/31 and 9/30. Which is true?

if the market rate of interest is 9%, the bonds will issue at a discount

paid dividends

financing activity

bought a delivery truck

investing activity