1. A warranty is an example of a/an _______ liability.
2. Cash equivalents are
A. not liquid and carry high risk.
B. not liquid and carry little risk.
C. very liquid and carry little risk.
D. very liquid and carry high risk.
3. Which of the following would indicate poor internal control over accounts receivable?
A The person handling cash receipts passes the receipts to someone who enters them into accounts receivable.
B The person who handles accounts receivable wouldn’t write off accounts as uncollectable.
C. The same person handling cash receipts also records the accounts receivable transactions.
D. The mailroom employees open the mail and give the cash receipts to another employee.
4. Using a 360-day year, the maturity value of a 69-day note for $1,500 at 7% annual interest is (rounded to the nearest cent)
5. Taylor Company has given you the following information from its aging of accounts receivable. The current amount in the allowance for doubtful accounts is a $958 credit.
Current $24,400 2% uncollectible
31-60 days 7,350 8% uncollectible
61-90 days 3,380 15% uncollectible
91 and up 1,220 30% uncollectible
Using this information, what is the amount of the journal entry to record the allowance for doubtful accounts?
6. A company purchased furniture on January 1, 2012. Its cost was $15,600, and it had a residual value of $1,600. Its useful life is determined to be three years. Using double-declining balance depreciation, the depreciation for 2012 to the nearest dollar will be
7. Brandon Company completed an aging of its accounts receivable and came up with an estimated amount of $6,342. The credit sales for the period are $85,000. The balance in the allowance for doubtful accounts is a debit of $817. If Brandon uses 5% of credit sales as its estimating uncollectable accounts, how much will the credit be to the allowance for doubtful accounts if Brandon uses the estimate of aging receivables as its method of estimating uncollectable accounts?
8. Use the _______ principle to estimate warranty liabilities.
9. By not accruing warranty expense,
A. reported expenses will be overstated, and reported liabilities will be understated.
B. reported liabilities will be overstated, and net income will be understated.
C. reported expenses will be understated, and net income will be understated.
D. reported liabilities will be understated, and net income will be overstated.
10. Nick Company has cash of $33,000; net accounts receivable of $41,000; short-term investments of $15,000; and inventory of $25,000. It also has $30,000 in current liabilities and $50,000 in long-term liabilities. The quick ratio for Nick Company is
11. Tammy Industries inadvertently debited a $5,000 betterment as an ordinary expense. Which of the following will occur as a result of this mistake?
A. Retained earnings will be overstated by $5,000.
B. The asset will be understated by $5,000.
C. Net income will be overstated by $5,000.
D. The asset will be overstated by $5,000.
12. Using a 365-day year, the maturity value of a 180-day note for $2,700 at 9% annual interest is (rounded to the nearest cent)
13. Which marketable securities are reported at cost on the balance sheet date?
A. Trading securities
B. Held-to-maturity securities
C. Trading and held-to-maturity securities
D. Available-for-sale securities
14. Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The amount at which item C should be recorded (rounded to the nearest dollar) is
15. If a $6,000, 10%, 10-year bond was issued at 104 on October 1, 2011, how much interest will accrue on December 31 if interest payments are made annually?
16. Casey Company’s bank statement shows a bank balance of $43,267. The statement shows a bank service charge of $50. Casey’s book balance shows outstanding checks of $5,288 and deposits in transit of $9,325. The bank-side reconciliation would show cash of
17. Mackey Company has a five-year mortgage for $100,000. In the first year of the mortgage, Mackey will report this liability as a
A. long-term liability of $100,000.
B. current liability of $80,000 and a long-term liability of $20,000.
C. current liability of $20,000 and a long-term liability of $80,000.
D. current liability of $100,000.
18. Which of the following is not a benefit to extending credit to customers?
A. Increased revenues
B. Wider range of customers
C. Increased profits
D. Bad-debt expenses
19. Amanda Industries had total assets of $600,000; total liabilities of $175,000; and total stockholders’ equity of $425,000. Amanda Industries’ debt ratio is
20. Jewell Company has current assets of $56,000; long-term assets of $135,000; current liabilities of $44,000; and long-term liabilities of $90,000. Jewell Company’s debt ratio is