The Value of Money mcq test bank

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Description

1. Brandon Company completed an aging of its accounts
receivable and came up with an estimated amount of $6,342. The credit sales for
the period are $85,000. The balance in the allowance for doubtful accounts is a
debit of $817. If Brandon uses 5% of credit sales as its estimating
uncollectible accounts, how much will the credit be to the allowance for
doubtful accounts if Brandon uses the percent of credit sales as its method of
estimating uncollectible accounts?

A. $5,067

B. $4,250

C. $7,159

D. $5,525

2. Brandon Company completed an aging of its accounts
receivable and came up with an estimated amount of $6,342. The credit sales for
the period are $85,000. The balance in the allowance for doubtful accounts is a
debit of $817. If Brandon uses 5% of credit sales as its estimating
uncollectable accounts, how much will the credit be to the allowance for
doubtful accounts if Brandon uses the estimate of aging receivables as its
method of estimating uncollectable accounts?

A. $7,159

B. $5,067

C. $4,250

D. $5,525

3. Which of the following is not a benefit to extending
credit to customers?

A. Wider range of customers

B. Increased profits

C. Increased revenues

D. Bad-debt expenses

4. Ryan Corporation made a basket purchase of three items.
Item A was appraised at $35,000; item B was appraised at $55,000; and item C
was appraised at $60,000. The purchase price was $125,000. The amount at which
item C should be recorded (rounded to the nearest dollar) is

A. $72,000.

B. $83,300.

C. $29,167.

D. $50,000.

5. Which of the following marketable securities are reported
at market value on the balance sheet date?

A. Held-to-maturities securities

B. Available-for-sale securities

C. Trading securities

D. Available-for-sale and trading securities

6. Brandon Corporation purchased a vein of mineral ore for
$3,250,000. It is estimated that 15,000,000 tons of ore are available to be
extracted. The salvage value is determined to be $400,000. The estimation
depletion expense for this year’s extraction of 1,760,000 tons of ore (rounded
to the nearest dollar) is

A. $428,267.

B. $381,333.

C. $334,400.

D. $400,000.

7. Cash equivalents are

A. not liquid and carry high risk.

B. very liquid and carry little risk.

C. not liquid and carry little risk.

D. very liquid and carry high risk.

8. Casey Company’s bank statement shows a bank balance of
$43,267. The statement shows a bank service charge of $50 and a bank collection
of $760 in Casey Company’s behalf. Casey’s book balance should be adjusted by a
total of

A. +$710.

B. +$810.

C. –$710.

D. +$760.

9. Using a 365-day year, the maturity value of a 180-day
note for $2,700 at 9% annual interest is (rounded

to the nearest cent)

A. $119.84.

B. $2,943.00.

C. $2,819.84.

D. $2,821.50.

10. Which marketable securities are reported at cost on the
balance sheet date?

A. Held-to-maturity securities

B. Available-for-sale securities

C. Trading and held-to-maturity securities

D. Trading securities

11. Jewell Company has current assets of $56,000; long-term
assets of $135,000; current liabilities of $44,000; and long-term liabilities
of $90,000. Jewell Company’s debt ratio is

A. 78.6%.

B. 127.3%.

C. 70.2%.

D. 239.3%.

12. Using a 360-day year, the maturity value of a 69-day
note for $1,500 at 7% annual interest is (rounded

to the nearest cent)

A. $1,605.00.

B. $20.13.

C. $1,520.13.

D. $1,584,88.

13. Margaret is a customer of Tammy Company. The company
wrote off her account of $1,200 on August15. On October 12, she sent in a
payment of $560. What will Tammy Company record first to reinstate

her account?

A. Debit Cash; credit Accounts Receivable/Margaret.

B. Debit Uncollectible Accounts Expense; credit Accounts
Receivable/Margaret.

C. Debit Accounts Receivable/Margaret; credit Allowance for
Doubtful Accounts.

D. Debit Allowance for Doubtful Accounts; credit Accounts
Receivable/Margaret.

14. Nick Company has cash of $33,000; net accounts
receivable of $41,000; short-term investments of $15,000; and inventory of
$25,000. It also has $30,000 in current liabilities and $50,000 in long-term

liabilities. The quick ratio for Nick Company is

A. 3.80.

B. 2.97.

C. 1.78.

D. 3.30.

15. Rick Company has cash of $143,000; net accounts
receivable of $89,000; short-term investments of $35,000; and prepaid expenses
of $40,000. It also has $50,000 in current liabilities and $80,000 in longterm
liabilities. The quick ratio for Rick Company is

A. 3.34.

B. 4.64.

C. 6.14.

D. 5.34.

16. Research and development costs (R&D) are generally

A. listed as “other intangibles” on the balance
sheet.

B. listed as “long-term assets” on the balance
sheet.

C. expensed and become part of the income statement.

D. listed as “current assets” on the balance
sheet.

17. Meranda Corporation purchases a machine for $125,000. It
has an estimated salvage value of $10,000 and is expected to produce 50,000
units in its lifetime. During the first year of operation, it produced 14,500
units. To the nearest dollar, the depreciation for the first year under the
units of production method

will be

A. $31,250.

B. $35,500.

C. $33,350.

D. $36,250.

18. A patent has amortization this year of $2,300. The
journal entry would be

A. debit Amortization Expense – Patent, $2,300; credit
Accumulated Depreciation – Patent, $2,300.

B. debit Amortization Expense – Patent, $2,300; credit
Patent, $2,300.

C. debit Accumulated Amortization – Patent, $2,300; credit
Patent, $2,300.

D. debit Accumulated Amortization – Patent, $2,300; credit
Amortization Expense – Patent, $2,300.

19. By not accruing warranty expense,

A. reported liabilities will be overstated, and net income
will be understated.

B. reported liabilities will be understated, and net income
will be overstated.

C. reported expenses will be understated, and net income
will be understated.

D. reported expenses will be overstated, and reported
liabilities will be understated.

20. Ryan Corporation made a basket purchase of three items.
Item A was appraised at $35,000; item B was appraised at $55,000; and item C
was appraised at $60,000. The purchase price was $125,000. The amount at which
item B should be recorded is

A. ($55,000/$150,000) × $125,000.

B. ($55,000/$95,000) × $150,000.

C. ($55,000/$125,000) × $150,000.

D. ($55,000/$95,000) × $125,000.

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