Strayer ACC 557 Week 7 Chapter 9 and Chapter 10 Quiz

This Tutorial contains All possible Questions from this chapter

Question no 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

• $16,400,000.
• $13,360,000.
• $12,400,000.
• $17,360,000.

Question no 2

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

• expensed when incurred.
• not recorded until they become material in amount.
• capitalized as a part of the cost of the asset.
• debited to the Accumulated Depreciation account

Question no 3

A gain or loss on the disposal of a plant asset is determined by comparing the

• original cost of the asset with the proceeds received from its sale.
• book value of the asset with the asset’s original cost.
• book value of the asset with the proceeds received from its sale.
• replacement cost of the asset with the asset’s original cost.

Question no 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 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?

• £7,573,750
• £6,483,750
• £7,800,000
• £7,665,000

Question no 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?

• $104,760
• $108,760
• $110,760
• $101,000

Question no 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

• $84,000.
• $140,000.
• $126,000.
• $60,480.

Question no 7

On a balance sheet, natural resources may be described more specifically as all of the following except

• oil reserves.
• timberlands.
• land improvements.
• mineral deposits.

Question no 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

• Current Liabilities, $125,000; Long-term Debt, $375,000.
• Current Liabilities, $375,000; Long-term Debt, $125,000.
• Current Liabilities, $500,000.
• Long-term Debt , $500,000.

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Question no 9

When an interest-bearing note matures, the balance in the Notes Payable account is

• less than the total amount repaid by the borrower.
• the difference between the maturity value of the note and the face value of the note.
• equal to the total amount repaid by the borrower.
• greater than the total amount repaid by the borrower

Question no 10

From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that

• interest must be paid on a periodic basis regardless of earnings.
• the bondholders do not have voting rights.
• income to stockholders may increase as a result of trading on the equity.
• bond interest is deductible for tax purposes.

Question no 11

The times interest earned ratio is computed by dividing

• income before interest expense by interest expense.
• net income by interest expense.
• income before income taxes and interest expense by interest expense.
• income before income taxes by interest expense.

Question no 12

If the market interest rate is greater than the contractual interest rate, bonds will sell

• at a discount.
• only after the stated interest rate is increased.
• at face value.
• at a premium.

Question no 13

The market interest rate is often called the

• coupon rate.
• contractual rate.
• stated rate.
• effective rate.

Question no 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

• Notes Payable 255,000
  Cash 255,000
• Notes Payable 250,000
  Interest Payable 5,000
  Cash 255,000
• Notes Payable 250,000
  Interest Payable 20,000
  Cash 270,000
• Notes Payable 250,000
  Interest Expense 5,000
  Cash 255,000

Question no 15

Most companies pay current liabilities

• by creating long-term liabilities.
• out of current assets.
• by issuing interest-bearing notes payable.
• by issuing stock.