ACC 557 Week 7 Quiz - Graded 100% Latest Version.docx

ACC 557 Week 7 Quiz - Graded 100% Latest V 1. A company has the following assets: Buildings and Equipment, less accumulated depreciation of $2,000,000 $ 7,600,000 Copyrights 960,000 Patents 4,000,000 Timberlands, less accumulated depletion of $2,800,000 4,800,000 The total amount reported under Property, Plant, and Equipment would be A). $16,400,000. B). $13,360,000. C). $12,400,000. D). $17,360,000. 2. Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally A). expensed when incurred. B). not recorded until they become material in amount. C). capitalized as a part of the cost of the asset. D). debited to the Accumulated Depreciation account 3. A gain or loss on disposal of a plant asset is determined by comparing the A). original cost of the asset with the proceeds received from its sale. B). book value of the asset with the asset's original cost. C). book value of the asset with the proceeds received from its sale. D). replacement cost of the asset with the asset's original cost. 4. Salem Company hired Kirk Construction to construct an office building for £8,000,000 on land costing £2,000,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2013 and it has a useful life of 40 years. The price of the building included land improvements costing £600,000 and personal property costing £750,000. The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What is the net amount reported for the building on Salem Company's December 31, 2013 statement of financial position? A). £7,573,750 B). £6,483,750 C). £7,800,000 D). £7,665,000 5. Yocum Company purchased equipment on January 1 at a list price of $100,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $2,000 cash discount. Yocum paid $5,000 sales tax on the equipment, and paid installation charges of $1,760. Prior to installation, Yocum paid $4,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment? A). $104,760 B). $108,760 C). $110,760 D). $101,000 6). A company purchased factory equipment for $350,000. It is estimated that the equipment will have a $35,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be A). $84,000. B). $140,000. C). $126,000. D). $60,480. 7. On a balance sheet, natural resources may be described more specifically as all of the following except A). oil reserves. B). timberlands. C). land improvements. D). mineral deposits. 8). On January 1, 2013, Donahue Company, a calendar-year company, issued $500,000 of notes payable, of which $125,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2013, is A). Current Liabilities, $125,000; Long-term Debt, $375,000. B). Current Liabilities, $375,000; Long-term Debt, $125,000. C). Current Liabilities, $500,000. D). Long-term Debt , $500,000. 9). When an interest-bearing note matures, the balance in the Notes Payable account is A). less than the total amount repaid by the borrower. B). the difference between the maturity value of the note and the face value of the note. C). equal to the total amount repaid by the borrower. D). greater than the total amount repaid by the borrower 10. From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that A). interest must be paid on a periodic basis regardless of earnings. B). the bondholders do not have voting rights. C). income to stockholders may increase as a result of trading on the equity. D). bond interest is deductible for tax purposes. 11). The times interest earned ratio is computed by dividing A). income before interest expense by interest expense. B). net income by interest expense. C). income before income taxes and interest expense by interest expense. D). income before income taxes by interest expense. 12. If the market interest rate is greater than the contractual interest rate, bonds will sell A). at a discount. B). only after the stated interest rate is increased. C). at face value. D). at a premium. 13). The market interest rate is often called the A). coupon rate. B). contractual rate. C). stated rate. D). effective rate. 14. On October 1, Steve's Carpet Service borrows $250,000 from First National Bank on a 3-month, $250,000, 8% note. The entry by Steve's Carpet Service to record payment of the note and accrued interest on January 1 is A). Notes Payable 255,000 Cash 255,000 B). Notes Payable 250,000 Interest Payable 5,000 Cash 255,000 C). Notes Payable 250,000 Interest Payable 20,000 Cash 270,000 D). Notes Payable 250,000 Interest Expense 5,000 Cash 255,000 15. Most companies pay current liabilities A). by creating long-term liabilities. B). out of current assets. C). by issuing interest-bearing notes payable. D). by issuing stock.