Question 1 Depreciation measures the actual decline in market value of an asset.

Question

Question 1

Depreciation measures the actual decline in market value of an asset.

True

False

5 points   

Question 2

Jenn and Dale are forming a partnership. Jenn is investing a building that has a market value of $90,000. However, the building carries a $56,000 mortgage that will be assumed by the partnership. Dale is investing $20,000 cash. The balance of Jenn's Capital account will be:

$80,000.

$24,000.

$34,000.

$44,000.

5 points   

Question 3

A company had a beginning balance in retained earnings of $430,000. It had net income of $60,000 and paid out cash dividends of $56,250 in the current period. The ending balance in retained earnings equals:

$546,250

$426,250

$490,000

$433,750.

5 points   

Question 4

Changes in accounting estimates are accounted for in current and future periods.

True

False

5 points   

Question 5

An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period the sales are recorded, and (2) reports accounts receivable at the estimated amount of cash to be collected is the:

Allowance method of accounting for bad debts.

Aging of notes receivable.

Adjustment method for uncollectible debts.

Direct write-off method of accounting for bad debts.

Cash basis method of accounting for bad debts.

5 points   

Question 6

Land is not subject to depreciation because it has an unlimited life. This means that items which increase the usefulness of the land such as parking lots are not depreciated.

True

False

5 points   

Question 7

The maturity date of a note refers to the date the note must be repaid.

True

False

5 points   

Question 8

A debit balance in retained earnings is referred to as a retained earnings deficit.

True

False

5 points   

Question 9

A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:

2 years.

5 years.

7 years.

8 years.

10 years.

5 points   

Question 10

A company can have a liability even if the amount of the obligation is unknown.

True

False

5 points   

Question 11

Par value of a stock refers to the:

Issue price of the stock.

Value assigned per share of stock by the corporate charter.

Market value of the stock on the date of the financial statements.

Maximum selling price of the stock.

Dividend value of the stock.

5 points   

Question 12

Blue and Red organize a partnership on January 1. Blue's initial investment consists of $800 cash, $1,700 equipment and a $500 note payable reflecting a bank loan for the new business. Red's initial investment is cash of $2,000. These amounts are the values agreed on by both partners. The journal entry to record Blue's investment is:

Debit Cash $2,000   Credit Blue, Capital    $2,000

Debit Cash $ 800Debit Equipment $1,700

Credit Notes Payable $500

Credit Blue, Capital $2,000

Debit Cash $800Debit Equipment $1700   Credit Blue, Capital $2,500

Debit Bloom, Capital $3,000 Credit Common Stock $3,000

5 points   

Question 13

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Path: p

Words:0

10 points   

Question 14

Identify the key advantages and disadvantages of corporations.

Path: p

Words:0

10 points   

Question 15

Kristen Marks and Shelly Sudd decide to form a partnership on August 1. Marks invests the following assets and liabilities in the new partnership:

The note payable is associated with the building and the partnership will assume responsibility for the loan. Sudd invested $100,000 in cash and $95,000 in equipment in the new partnership. Prepare the journal entries to record the two partners' original investments in the new partnership.

Path: p

Words:0

10 points   

Question 16

A company's stock is selling for $35.70 per share at year-end. This current year it paid shareholders a $1.43 per share cash dividend, reported earnings per share of $11.00, and had 750,000 common shares outstanding at year-end. Calculate the company's dividend yield.

Path: p

Words:0

$80,000.

$24,000.

$34,000.

$44,000.

Explanation / Answer

1. Depreciation measures the actual decline in market value of an asset. False

As depeciation is just an estimte of the decline in the value of the asset over its useful lifetime based on different methods.

2. The balance of Jenn's Capital account will be $90000 - $56000 + $20000 = $44000

3. The ending balance in retained earnings equals 430000 + 60000 - 56250 = $433750

4. Changes in accounting estimates are accounted for in current and future periods. True

Accounting estimates are made for the current year or future years and are accounted for in the period of change.

5. An accounting procedure that (1) estimates and reports bad debts expense from credit sales during the period the sales are recorded, and (2) reports accounts receivable at the estimated amount of cash to be collected is the Allowance method of accounting for bad debts.

6. Land is not subject to depreciation because it has an unlimited life. This means that items which increase the usefulness of the land such as parking lots are not depreciated. False

The items that increase the usefulness of the land are depreciated.

7. The maturity date of a note refers to the date the note must be repaid. False

It is the date on which principal + interest must be repaid.

8. A debit balance in retained earnings is referred to as a retained earnings deficit.True

the retained earnings have a credit balance as it is reported on the liabilities and shareholder's equity side.

9. At that point the remaining cost to be depreciated should be allocated over the remaining. 7years

It is an estimate and should be accounted for in the period of change i.e starting from 4th year till its useful life i.e 10 years.

10. A company can have a liability even if the amount of the obligation is unknown. True

Contingent liabilities are reported this way sometimes.

11. Par value of a stock refers to the: Value assigned per share of stock by the corporate charter.

12. Debit Cash $ 800

Debit Equipment $1,700

Credit Notes Payable $500

Credit Blue, Capital $2,000

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.