Ram 58.doc

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1. 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
A. $72,000. B. $83,300. C. $29,167. D. $50,000.
5. Which of the following would indicate poor internal control over accounts receivable?
A. The same person handling cash receipts also records the accounts receivable transactions.
B. The person who handles accounts receivable wouldn’t write off accounts as uncollectable.
C. The person handling cash receipts passes the receipts to someone who enters them into accounts receivable.
D. The mailroom employees open the mail and give the cash receipts to another employee.
6. 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 $100,000.
C. current liability of $80,000 and a long-term liability of $20,000. D. current liability of $20,000 and a long-term liability of $80,000.
7. Which marketable securities are reported at cost on the balance sheet date?
A. Trading securities
B. Trading and held-to-maturity securities
C. Available-for-sale securities
D. Held-to-maturity securities.
10. By not accruing warranty expense,
A. reported expenses will be overstated, and reported liabilities will be understated.
B. reported liabilities will be understated, and net income will be overstated.
C. reported liabilities will be overstated, and net income will be understated.
D. reported expenses will be understated, and net income will be understated.
15. A company receives a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the customer owe using a 360-day year?
A. $39.38 B. $315.00 C. $38.84 D. $354.38
16.Which of the following would be considered a contingent liability?
A. Accounts payable obligation
B. Pending legal action
C. Sales tax obligation
D. Mortgage obligation
17. Which of the following would be considered a cash equivalent?
A. Time deposits
B. Money orders
C. Checks
D. Currency
18. If the amount extracted from a coal mine was different every year for four years, you would
A. credit accumulated depletion—coal mine for the same amount each year.
B. use the same depletion expense rate per unit each year.
C. recompute the depletion expense rate per unit each year.
D. debit depletion expense for the same amount each year.
19. 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?
A. None B. $150 C. $104 D. $500
20. use the _______ principle to estimate warranty liabilities.
A. objectivity B. entity C. matching D. conservatism