Principles of Accounting BBUS - Practical question 7- 17

CHAP 7-10 The principles of developing an accounting information system do not include a. usefulness. b. flexibility. c. cost effectiveness. d. elimination of human involvement. Postings to the control accounts in the general ledger are made a. annually. b. daily. c. monthly. d. Weekly. A subsidiary ledger is a. used in place of the general ledger if the general ledger is destroyed or stolen. b. a group of accounts used by branches and subsidiaries of a corporate business. c. a group of accounts with a common characteristic that provides detailed information about a control account in the general ledger. d. used to post excess transactions if a general ledger account becomes full during an accounting period. Proving the equality of the totals in the columns of multiple-column special journals is called a. posting to the subsidiary. b. debiting and crediting. c. footing and crossfooting. d. updating the master file. A subsidiary ledger frees the general ledger from details of a. individual balances. b. external transactions. c. internal transactions. d. the control account. A company would not likely use subsidiary ledgers for a. inventory. b. owner's capital. c. equipment. d. accounts receivable. Which of the following is not a special journal? a. Sales journal b. Purchases journal c. General journal d. Cash receipts journal Adjusting entries are recorded a. only on the worksheet. b. only in the general ledger. c. in the general journal. d. in the special journals. A company uses a sales journal, cash receipts journal, purchases journal, cash payments journal, and a general journal. A cash sales return would be recorded in the a. sales journal. b. cash receipts journal. c. cash payments journal. d. general journal. If an owner withdraws cash for personal use, the transaction should be recorded in the a. sales journal. b. cash receipts journal. c. general journal. d. cash payments journal. Debit postings to the individual accounts in an accounts receivable subsidiary ledger generally come from the a. sales journal. b. cash receipts journal. c. purchases journal. d. cash payments journal. When the totals of the sales journal are posted at the end of the month, there will be credits to a. Sales and Merchandise Inventory and debits to Accounts Receivable and Cost of Goods Sold. b. Accounts Receivable and Cost of Goods Sold and debits to Sales and Merchandise Inventory. c. Sales and debits to each individual customer account. d. the Sales account only, and no debits. Which of the following assets does not decline in service potential over the course of its useful life? a. Equipment b. Furnishings c. Land d. Fixtures Belle Company buys land for $50,000 on 12/31/07. As of 3/31/08, the land has appreciated in value to $50,700. On 12/31/08, the land had an appraised value of$51,800. By what amount should the Land account be increased in 2008? a.$0 b. $700 c. $1,100 d. $1,800 Feeney Clinic purchases land for $130,000 cash. The clinic assumes $1,500 in property taxes due on the land. The title and attorney fees totaled $1,000. The clinic has the land graded for $2,200. What amount does Feeney Clinic record as the cost for the land? a. $132,200 b. $130,000 c. $134,700 d. $132,500 Pine Company acquires land for $86,000 cash. Additional costs are as follows: Removalofshed $300 Fillingandgrading 1,500 Salvagevalueoflumberofshed 120 Brokercommission 1,130 Pavingofparkinglot 10,000 Closingcosts 560 Pine will record the acquisition cost of the land as a. $86,000. b. $87,690. c. $89,610. d. $89,370. Shawnee Hospital installs a new parking lot. The paving cost $30,000 and the lights to illuminate the new parking area cost $15,000. Which of the following statements is true with respect to these additions? a. $30,000 should be debited to the Land account. b. $15,000 should be debited to Land Improvements. c. $45,000 should be debited to the Land account. d. $45,000 should be debited to Land Improvements. Stories Company purchased equipment and these costs were incurred: Cashprice $22,500 Salestaxes 1,800 Insuranceduringtransit 320 430 Installationandtesting $25,050 Totalcosts Stories will record the acquisition cost of the equipment as a. $22,500. b. $24,300. c. $24,620. d. $25,050. Upton Company purchased equipment on January 1 at a list price of $50,000, with credit terms 2/10, n/30. Payment was made within the discount period and Upton was given a $1,000 cash discount. Upton paid $2,500 sales tax on the equipment, and paid installation charges of $880. Prior to installation, Upton paid $2,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment? a. $52,380 b. $54,380 c. $55,380 d. $50,500 Useful life is expressed in terms of use expected from the asset under the a. declining-balance method. b. straight-line method. c. units-of-activity method. d. none of these Equipment was purchased for $75,000. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be a. $17,700. b. $14,700. c. $12,300. d. $12,000. A truck was purchased for $120,000 and it was estimated to have a $24,000 salvage value at the end of its useful life. Monthly depreciation expense of $2,000 was recorded using the straight-line method. The annual depreciation rate is a. 20%. b. 2%. c. 8%. d. 25%. A company purchased office equipment for $40,000 and estimated a salvage value of $8,000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is a. 20%. b. 25%. c. 40%. d. 4%. A plant asset cost $144,000 and is estimated to have an $18,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be a. $12,060. b. $20,250. c. $17,718. d. $13,785. A factory machine was purchased for $75,000 on January 1, 2008. It was estimated that it would have a $15,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2008. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2008 would be a. $7,500. b. $12,000. c. $15,000. d. $6,000. Wine Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $24,000 that will produce an estimated 100,000 units over its useful life. Estimated salvage value at the end of its useful life is $2,000. What is the depreciation cost per unit? a. $2.20 b. $2.40 c. $0.22 d. $0.24 A plant asset was purchased on January 1 for $50,000 with an estimated salvage value of $10,000 at the end of its useful life. The current year's Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is a. 10 years. b. 8 years. c. 5 years. d. 3 years. A company purchased factory equipment for $250,000. It is estimated that the equipment will have a $25,000 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. $100,000. b. $60,000. c. $90,000. d. $43,200. Grey Company purchased a new van for floral deliveries on January 1, 2008. The van cost $36,000 with an estimated life of 5 years and $9,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2009? a. $5,760 b. $17,280 c. $23,040 d. $8,640 Baden Company purchased machinery with a list price of $32,000. They were given a 10% discount by the manufacturer. They paid $200 for shipping and sales tax of $1,500. Baden estimates that the machinery will have a useful life of 10 years and a residual value of $10,000. If Baden uses straight-line depreciation, annual depreciation will be a. $2,050. b. $2,036. d. $3,050. d. $1,880. A company sells a plant asset which originally cost $180,000 for $60,000 on December 31, 2008. The Accumulated Depreciation account had a balance of $72,000 after the current year's depreciation of $18,000 had been recorded. The company should recognize a a. $120,000 loss on disposal.