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1 | | A current liability is a short-term obligation that: |
| | A) | will be paid with cash only. |
| | B) | will be paid within one year or one operating cycle, whichever is longer. |
| | C) | will be paid within one year or one operating cycle, whichever is shorter. |
| | D) | will be paid within one month of the balance sheet date. |
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2 | | Bush Corporation had a balance in Accounts Payable of $14,000 and $16,000 on December 31, 2014 and December 31, 2015 respectively. During 2015, Bush had a Cost of Good Sold of $120,000. What is Bush's Accounts Payable Turnover ratio? |
| | A) | 8.6 |
| | B) | 8.0 |
| | C) | 7.5 |
| | D) | None of the above |
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3 | | Abigail Association paid $14,000 in vacation pay during 2014 that was earned in 2013. It estimates that $63,500 in vacation time has been earned during 2014 but not taken. The required adjusting entry will include a: |
| | A) | debit to Compensation Expense and a credit to Cash for $63,500. |
| | B) | debit to Compensation Expense and a credit to Cash for $14,000. |
| | C) | debit to Compensation Expense and a credit to Accrued Vacation Liability for $63,500. |
| | D) | debit to Compensation Expense and a credit to Accrued Vacation Liability for $77,500. |
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4 | | Your company borrowed $50,000 on September 30 by issuing a 6-month short-term note payable that bears simple interest of 12%. On December 31, the end of the accounting period, the required adjusting entry related to the note will include a debit to Interest Expense and a credit to Interest Payable for the accrued amount of: |
| | A) | $1,500 |
| | B) | $6,000 |
| | C) | $3,000 |
| | D) | $2,000 |
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5 | | On October 1, 2015 your company issued a 30-year mortgage note of $459,000 that requires monthly payments, excluding interest, of $3,000 at the end of each month, beginning October 31, 2015. On the December 31, 2015 balance sheet, the mortgage note will be reported as a: |
| | A) | current liability of $27,000 and a long-term liability of $423,000. |
| | B) | current liability of $36,000 and a long-term liability of $414,000. |
| | C) | current liability of $9,000 and a long-term liability of $441,000. |
| | D) | a long-term liability of $450,000. |
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6 | | What causes a temporary difference with regards to taxes? |
| | A) | Poor accounting practices. |
| | B) | Differences between GAAP and the tax code that reverse over time. |
| | C) | Differences between GAAP and the tax code are permanent. |
| | D) | Paying the IRS more than you should. |
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7 | | On November 1, Bob's Plowing bought a snow plow for $400,000, which it financed with a note to be paid off in three years with annual installments due October 31 of $163,686 (the present value of the three installments is $400,000). On November 1, Bob's journal entry to record the purchase is: |
| | A) | (13.0K)
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| | B) | (15.0K)
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| | C) | (15.0K)
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| | D) | (15.0K)
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8 | | A contingent liability and its related loss should be recorded when: |
| | A) | it is material. |
| | B) | the amount of the loss is reasonably estimated and the occurrence of the loss is possible. |
| | C) | the amount of the loss is reasonably estimated and the occurrence of the loss is probable. |
| | D) | the amount of the loss can be estimated. |
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9 | | The difference between an operating and capital lease is that: |
| | A) | an operating lease records a liability for the entire lease amount while a capital lease does not. |
| | B) | an operating lease records an increase in an asset for the entire lease amount while a capital lease does not. |
| | C) | present values are used to calculate an operating lease but not a capital lease. |
| | D) | an operating lease records a rent expense as the asset is used and a capital lease does not. |
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10 | | Table A.4 - Present Value of Annuity of $1 (50.0K) Your grandmother has agreed to send you $14,000 a year for 4 years to help finance your college education. What is the present value of this annuity at a discount rate of 10%? |
| | A) | $34,816.60 |
| | B) | $56,000.00 |
| | C) | $55,600.00 |
| | D) | $44,378.60 |
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