KAPLAN AC113 UNIT 8 EXAM 2015 (PERFECT ANSWER) - 92746

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Question 1. Merchandise inventory is reported on the balance sheet in the section entitled _____. current assets fixed assets current liabilities stockholders' equity Question 2. Question : A machine with a useful life of 10 years and a residual value of $4,000 was purchased for $30,000. What is annual depreciation under the straight-line method? $3,000 $3,400 $2,600 $5,200 Question 3. Question : The Drilling Company purchased a mining site for $500,000 on July 1, 2010. The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2010, the company extracted 6,500 tons of ore. The depletion expense for 2010 is $37,700 $42,000 $32,500 $27,300 Question 4. Question : What type of account is Allowance for Doubtful Accounts? Contra asset Asset Revenue Expense Question 5. Question : Use the following data to calculate cost of merchandise sold under FIFO method. September 1 Beginning Inventory 15 units @ $20 September 10 Purchases 20 units @ $25 September 20 Purchases 25 units @ $28 September 30 Ending Inventory 30 units $825 $750 $675 $600 Question 6. Question : A 60-day, 10% note for $6,000 dated April 15 is received from a customer on account. The face value of the note is _______. : $6,100 $5,400 $5,900 $6,000 Question 7. Question : In reference to a promissory note, the person who makes the promise to pay is called the _______. maker payee seller receiver Question 8. Question : The due date of a 60-day note dated July 12 is _______. : September 11 September 8 September 9 September 10 Question 9. Question : A written promise to pay a sum of money on demand or at a definite time is called a (n) _______. default deferral accrual promissory note Question 10. Question : A note receivable due in 90 days is listed on the balance sheet under _______. long-term liabilities fixed assets current liabilities current assets Question 11. Question : A machine was purchased for $60,000. It has a useful life of 5 years and a residual value of $6,000. Under the straight-line method, what is annual depreciation expense? $13,200 $12,000 $11,000 $10,800 Question 12. Question : A note receivable due in five years is listed on the balance sheet under the caption _______. investments current assets fixed assets stockholders' equity Question 13. Question : Goodwill is _______. amortized similar to other intangibles only written down if an impairment in value occurs charged to expense immediately amortized over 40 years or its economic life, whichever is shorter Question 14. Question : The two most widely used methods for determining the cost of inventory are _______. FIFO and LIFO FIFO and average cost LIFO and average cost gross profit and average cost Question 15. Question : Salvage value has a similar meaning as _______. residual value scrap value book value both residual value and scrap value Question 16. Question : Receivables are usually a significant portion of _______. total current liabilities total liabilities total current assets total assets Question 17. Question : The inventory data for an item for November are: Nov. 1 Inventory 25 units at $20 10 Purchased 30 units at $21 30 Purchased 10 units at $22 Sold 35 units Using the last-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30? $640 $623 $600 $605 Question 18. Question : Intangible assets are used in operations but _______. cannot be specifically identified cannot be sold lack physical substance cannot be long-lived Question 19. Question : Book value is defined as _______. current market value less residual value cost less residual value current market value less accumulated depreciation cost less accumulated depreciation Question 20. Question : To measure depreciation, all of the following must be known EXCEPT: Market value Residual value Historical cost Estimated life
Solution Description

Question 1. Merchandise inventory is reported on the balance sheet in the section entitled _____.

current assets

fixed assets

current liabilities

stockholders' equity

Question 2. Question : A machine with a useful life of 10 years and a residual value of $4,000 was purchased for $30,000. What is annual depreciation under the straight-line method?

$3,000

$3,400

$2,600

$5,200

Question 3. Question : The Drilling Company purchased a mining site for $500,000 on July 1, 2010. The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2010, the company extracted 6,500 tons of ore. The depletion expense for 2010 is

$37,700

$42,000

$32,500

$27,300

Question 4. Question : What type of ac

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