Accounting Questions

QUESTION 1
A factory machine was purchased for $375,000 on January 1, 2014. It was estimated that it would have a $75,000 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 2014. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2014 would be
a. $37,500
b. $60,000
c. $75,000
d. $30,000
5 points
   
QUESTION 2
Farr Company purchased a new van for floral deliveries on January 1, 2014. The van cost $56,000 with an estimated life of 5 years and $14,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2014?
a. $11,200
b. $8,400
c. $16,800
d. $22,400
5 points

QUESTION 3
Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has been recorded was disposed of for $180,000 cash. The entry to record this event would include a
a. Gain of $40,000
b. Loss of $40,000
c. Credit to the Equipment account for $220,000
d. Credit to the Accumulated Depreciation Account for $200,000
5 points

QUESTION 4
Which of the following fixed assets is not depreciated?
a. Land
b. Machinery
c. Equipment
d. Buildings
5 points

QUESTION 5
What information is needed to calculate depreciation expense using the straight-line method?
a. Initial Cost and Salvage Value Only
b. Salvage Value and Useful Life only
c. Initial Cost only
d. Initial Cost, Salvage Value and Useful Life
5 points

QUESTION 6
Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years. Determine the annual straight-line depreciation.
a. $8,125
b. $8,600
c. $7,650
d. $61,200
5 points

QUESTION 7
The book value of a depreciable asset is:
a. The original cost of the asset
b. The original cost of the asset less its accumulated depreciation
c. The original cost of the asset plus its salvage value
d. The total accumulated depreciation on the asset
5 points

QUESTION 8
If the useful life of an asset is 10 years, what is the straight line rate and what is the double declining balance rate?
a. SL = 10%, DDB = 10%
b. SL = 10%, DDB = 20%
c. SL = 20%, DDB = 20%
d. SL = 5%, DDB = 10%
5 points

QUESTION 9
Employer payroll taxes include all of the following EXCEPT:
a. FICA Taxes
b. Federal Unemployment Taxes
c. State Unemployment Taxes
d. Federal Income Taxes
5 points

QUESTION 10
EMPLOYEE payroll deductions include each of the following except:
a. Federal Unemployment Taxes
b. Federal Income Taxes
c. FICA taxes
d. Insurance, Pension Plans and Union Dues
5 points

QUESTION 11
The tax that is paid equally by the employee and the employer is:
a. Federal Income Tax
b. Federal Unemployment Tax
c. FICA tax
d. State Unemployment Tax
5 points
   
QUESTION 12
In order for a contingent liability to be recorded in the financial statements, it must be:
a. Remote
b. Probable
c. Reasonably Possible
d. None of the above
5 points

QUESTION 13
During June, a company sold a product for $60,000 that includes a 36-month warranty for repairs. The average cost of repairs over the warranty period is 5% of the sales price. The entry to record the estimated product warranty expense for June is shown below.
a. Product Warranty Expense                   3,000
    Product Warranty Liability                     3,000
b. Product Warranty Liability                     3,000
    Cash                                                    3,000
c. Product Warranty Liability                     3,000
    Product Warranty Expense                   3,000
d. Cash                                                      3,000
    Product Warranty Liability                     3,000
5 points

QUESTION 14
If Common Stock is issued for an amount greater than par value, the excess should be credit to:
a. Cash
b. Retained Earnings
c. Paid in Capital in Excess of Par
d. Legal Capital
5 points

QUESTION 15
Treasury Stock is:
a. stock issued by the U.S. Treasury Department
b. stock purchased by a corporation and held as an investment
c. corporate stock issued by the treasurer of a company
d. a corporation's own stock which has been issued and subsequently reacquired but not retired.
5 points

QUESTION 16
The acquisition of treasury stock by a corporation:
a. increases its total assets and total stockholder's equity
b. decreases its total assets and total stockholder's equity
c. has no effect on its total assets and total stockholder's equity
d. requires that a gain or loss be recognized on the income statement
5 points

QUESTION 17
Which of the following cash dividend dates does not require a journal entry?
a. Date of Declaration
b. Date of Record
c. Date of Payment
d. All of the dates require a journal entry
5 points

QUESTION 18
Par value:
a. Is the arbitrary monetary value assigned per share in the corporate charter.
b. Represents what a share of stock is worth.
c. Represents the original selling price for a share of stock.
d. Is established for a share of stock after it is issued.
5 points

QUESTION 19
Which of the following is the appropriate general journal entry to record the declaration of a cash dividends?
a. Debit Retained Earnings, credit Cash
b. Debit Cash Dividends Payable, Credit Cash
c. Debit Paid-In Capital, Credit Cash Dividends Payable
d. Debit Cash Dividends, Credit Cash Dividends Payable
5 points

QUESTION 20
On April 1, 10,000 shares of $5 par common stock were issued at $22. How much should be credited to Paid-In Capital in Excess of Par?
a. $220,000
b. $50,000
c. $170,000
d. $0

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1 Depreciation on units of activity is calculated similar to straight line, but you come up with a per unit value of activity that is multiplied by actual activity to get depreciation expense.
Cost                    375,000.00
Salvage value                      (75,000.00) S
Depreciation Base     300,000.00
Estimated total hours        40,000.00
Depreciation Per unit                 7.50
Units used                 4,000.00
Total Depreciation                30,000.00...