Question

29.  The purpose of depreciation accounting is to:

a.   Reflect changes in the current value of a plant asset over its useful life

b.   Accumulate funds to replace a plant asset at the end of its useful life

c.   Allocate a plant asset’s cost, less its salvage value, to expense over the asset’s useful life

d.   Have a plant asset’s book value equal its initial cost by the end of its useful life

30.  Which of the following plant assets is not depreciated?

      a    .Furniture and equipment

      b.    Land improvements

      c.    Delivery truck

      d.    All of these are depreciated

31.  A land site for a new office building is purchased for $360,000 by Texas Coast Company.  A barn on the site will be removed at a net cost of $34,000.  

The $34,000 razing expenditure is properly debited to:

a.   Office Building

b.   Land

c.   Razing Expense

d.   Land Improvements

32.  Current liabilities are all obligations that require, within the coming year or current operating cycle, whichever is longer:

a.   The payment of cash

b.   The use of existing current assets

c.   The creation of other current liabilities

d.   Either the use of existing current assets or the creation of other current liabilities

33.  Which of the following transactions that affects current liabilities has a corresponding effect on the income statement?

       a.  Purchase inventory on credit from company QRS on January 1

       b.  Payment to QRS on February 1for a January 1 purchase

       c.   Interest accrued on a note payable

       d.  Payment to employees in March for wages earned in February

34.  How many payment periods are in a 6-year, 8% bond with an effective interest rate of 6%, and interest paid semiannually?  What is the effective interest rate per payment period?

       a.    3,8%

       b.  12,3%

       c.  48,4%

       d.    6,8%

35.  A single-step income statement for a merchandising firm:

a.   Shows a different net income amount than a multiple-step income statement

b.   May not be used because it is an unacceptable reporting format

c.   Does not show a gross profit on sales amount

d.   None of the above

36.  On the income statement of a merchandising company, interest income and interest expense are reported:

a.   By offsetting interest income and interest expense and showing the excess as an operating revenue or expense

b.   As separate items of other income and expense below the net operating income or loss

c.   As part of cost of goods sold

d.   By showing interest income as additional sales revenue and interest expense as an operating expense

37.  Which of the following are not inputs to the Cash Budget?

a.    Materials purchased and paid-for from the Direct Materials Budget

b.    Cash purchases of equipment from the Capital Expenditures Budget

      c.    Cost of goods sold from the Budgeted Income Statement

      d.    Rental payments from the Manufacturing Overhead Budget

38.  What budget must be prepared prior to the Production Budget?

a.   Cash budget

       b.   Direct materials budget

c.   Manufacturing overhead budget

d.   None of the above

39.  Which one of the following selections is not a part of Paid-in Capital?

a.   Retained earnings

b.   Common stock

c.   Additional paid-In capital

d.   All of the above

40.  Which of the following statements is correct?

a.   A corporation’s issued stock may exceed its outstanding stock.

b.   A corporation’s outstanding stock may exceed its authorized stock.

c.   A corporation’s issued stock may exceed its authorized stock.

d.   A corporation’s treasury stock may exceed its issued stock.

Answer 1

29.  The purpose of depreciation accounting is to:

Answer:- C Allocate a plant asset’s cost, less its salvage value, to expense over the asset’s useful life

30.  Which of the following plant assets is not depreciated?

Answer:- B Land Improvement

31.  A land site for a new office building is purchased

or $360,000 by Texas Coast Company.  A barn on the site will be removed at a net cost of $34,000.  

The $34,000 razing expenditure is properly debited to:

Answer:- Land

32.   Current liabilities are all obligations that require, within the coming year or current operating cycle, whichever is longer:

Answe:- a Payment of Cash

33.  Which of the following transactions that affects current liabilities has a corresponding effect on the income statement?

Answer:-C Interest accrued on a note payable

34.  How many payment periods are in a 6-year, 8% bond with an effective interest rate of 6%, and interest paid semiannually?  What is the effective interest rate per payment period?

Answer:- b 12, 3%

35.  A single-step income statement for a merchandising firm:

Answer:- c Doesnot show a gross profit on sales

36.  On the income statement of a merchandising company, interest income and interest expense are reported:

Answer:- b.   As separate items of other income and expense below the net operating income or loss

37.  Which of the following are not inputs to the Cash Budget?

Answer:- c.    Cost of goods sold from the Budgeted Income Statement

38.  What budget must be prepared prior to the Production Budget?

Answer:- b Direct Material Budget

39.  Which one of the following selections is not a part of Paid-in Capital?

Answer:- a Retained Earnings

40.  Which of the following statements is correct?

Answer:- a.   A corporation’s issued stock may exceed its outstanding stock.