Exam 3 Review

Question 1

Depreciation is a process of:

Accepted Answer

cost allocation

Question 2

To be classified as a current liability, a debt must be expected to be paid within:

Accepted Answer

1 year

Question 3

Accounts and notes receivable are reported in the current assets section of the balance sheet at:

Accepted Answer

cash net realizable value

Question 4

a plant asset with a cost of $300,000 and accumulated depreciation of $285,000 is sold for $35,000. What is the G/L?

Accepted Answer

20000 gain

Question 5

Adjustments for prepaid expenses:

Accepted Answer

decrease assets and increase expenses.

Question 6

In the stockholders' equity section, the cost of treasury stock is deducted from:

Accepted Answer

APIC and retained earnings

Question 7

the company purchased supplies costing 9,000 and at the end of the period, had 1,000 on hand. What is the adjust. entry?

Accepted Answer

dr. supplies exp 8000 Cr. supplies 8000

Question 8

The ADA account is necessary because:

Accepted Answer

it is not possible to know which accounts will not be paid

Question 9

Drake Company signs $400,000, 6%, 6 months note. What is the adjusting entry required on march 30?

Accepted Answer

Dr. Interest exp. 6000 Cr. Interest Pay. 6000

Question 10

On January 1, 2022, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. The entry to record the issuance:

Accepted Answer

credit to Bonds Payable for $200,000.

Question 11

A company has 10,000 shares of preferred stock, 100,000 shares of common stock. If they declare a $25,000 dividend, the

Accepted Answer

preferred stockholders will receive all of the dividend

Question 12

if the market interest rate is higher than the stated rate, the bond will sell at a

Accepted Answer

discount

Question 13

Additions to plant assets are:

Accepted Answer

capital expenditures

Question 14

dividends in arrears are dividends on

Accepted Answer

cumulative preferred stock that have not been declared for a period

Question 15

Laurel Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, this indicates

Accepted Answer

market < stated

Question 16

Entries for cash dividends are required on the:

Accepted Answer

declaration date and the payment date

Question 17

the interest charged on a $30,000 note payable, at the rate of 6%, on a 90-day note would be

Accepted Answer

450

Question 18

the balance in accumulated depreciation represents

Accepted Answer

amount charged to expense since the acquisition of the asset

Question 19

On January 1, a machine with a useful life of 20 years, was purchased for $500,000. what is the dep. for year 2?

Accepted Answer

25000

Question 20

If common stock is issued for an amount greater than par value, the excess should be credited to:

Accepted Answer

paid in capital in excess of par value

Question 21

ABC Corp. issues 1,000 shares of $10 par value common stock at $12 per share. When the transaction is recorded, credits

Accepted Answer

Common Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000.

Question 22

Adjustments for unearned revenues:

Accepted Answer

decrease liabilities and increase revenues.

Question 23

I borrow $88,500 on September 1, 2022, from Farley State Bank by signing an $88,500, 12%, 1-year note. Interest Dec 31?

Accepted Answer

3540

Question 24

which of the following will be classified as a current liability?

Accepted Answer

dividend payable

Question 25

Each of the following is a major type (or category) of adjusting entry except:

Accepted Answer

unearned expenses

Exam 3 Review

Questions 25

Exam 3 Review

Questions 25