Devin
Accounting Test Chapter 9 & 10
1) Once cost is established for a capital asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.
True or False
2) Notes payable usually require the borrower to pay interest.
True or False
3) 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
4) Cole Company buys land for 50,000 on 12/31/01. As of 3/31/01, the land has appreciated in value to 50,500. On 12/31/01, that has an appraised value of 51,800. By what amount should the land account be increased in 2001?
a) 0
b) 300
c) 500
d) 800 5) The net book value of an asset is equal to the
a) Asset’s market value less its historical cost
b) Asset’s cost less amortization expense
c) Replacement cost of the asset
d) Asset’s cost less accumulated amortization
6) The Fizzard Company purchases a new delivery truck for 45,000. The logo of the company is painted on the side of the truck for 600. The truck license is 60. The truck undergoes safety testing for 110. What does Fizzard record as the cost of the new truck?
a) 45,770
b) 45,060
c) 45,000
d) 45,710
7) Liabilities are classified on the balance sheet as current or
a) Deferred
b) Unearned
c) Long-term
d) Accrued
Algonquin Provincial Bank agrees to lend the Grimwood Brick Company 100,000 on January 1. Grimwood Brick Company signs a 100,000, 8%, 9 month note.
8) What entry will Grimwood Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?
a) Dr. Notes Payable 100,000 Interest Payable 6,000 Cr. Cash 106,000
b) Dr. Notes Payable 106,000 Cr. Cash 106,000
c) Dr. Interest Expense 6,000 Notes Payable 100,000 Cr. Cash 106,000
d) Dr. Interest Payable 4,000 Notes Payable 100,000 Interest Expense 2,000 Cr. Cash 106,000
9)
1) Once cost is established for a capital asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.
True or False
2) Notes payable usually require the borrower to pay interest.
True or False
3) 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
4) Cole Company buys land for 50,000 on 12/31/01. As of 3/31/01, the land has appreciated in value to 50,500. On 12/31/01, that has an appraised value of 51,800. By what amount should the land account be increased in 2001?
a) 0
b) 300
c) 500
d) 800 5) The net book value of an asset is equal to the
a) Asset’s market value less its historical cost
b) Asset’s cost less amortization expense
c) Replacement cost of the asset
d) Asset’s cost less accumulated amortization
6) The Fizzard Company purchases a new delivery truck for 45,000. The logo of the company is painted on the side of the truck for 600. The truck license is 60. The truck undergoes safety testing for 110. What does Fizzard record as the cost of the new truck?
a) 45,770
b) 45,060
c) 45,000
d) 45,710
7) Liabilities are classified on the balance sheet as current or
a) Deferred
b) Unearned
c) Long-term
d) Accrued
Algonquin Provincial Bank agrees to lend the Grimwood Brick Company 100,000 on January 1. Grimwood Brick Company signs a 100,000, 8%, 9 month note.
8) What entry will Grimwood Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?
a) Dr. Notes Payable 100,000 Interest Payable 6,000 Cr. Cash 106,000
b) Dr. Notes Payable 106,000 Cr. Cash 106,000
c) Dr. Interest Expense 6,000 Notes Payable 100,000 Cr. Cash 106,000
d) Dr. Interest Payable 4,000 Notes Payable 100,000 Interest Expense 2,000 Cr. Cash 106,000
9)