Test
SU 9.2
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Preguntas del test (25)
1A physical inventory count showed an entity had inventory costing US $1,000,000 on hand at December 31, Year 1. Excluded from this amount were the following:
• Goods costing US $82,000, shipped to a customer free on board (FOB) shipping point on December 28, Year 1. They were expected to be received by the customer on January 4, Year 2.
Compute the correct ending inventory to be reported on the shipper’s statement of financial position at December 31, Year 1.- AA. US $1,000,000
- BB. US $1,082,000
- CC. US $918,000
- DD. US $1,204,000
2An entity with a December 31 year end purchased US $2,000 of inventory on account. The seller was responsible for delivery to the shipping point, with freight of US $50 paid at destination by the buyer. The invoice date was December 27, Year 1, and the goods arrived on January 3, Year 2.
Now assume the terms required the seller to deliver to the destination instead of the shipping point. What is the correct amount of inventory relating to this purchase on the Year 1 financial statements?- AA. US $0
- BB. US $2,000
- CC. US $50
- DD. US $2,050
3Which of the following is not an appropriate basis for measuring the cost of property, plant, and equipment?
- AA. The purchase price, freight costs, and installation costs of a productive asset should be included in the asset’s cost.
- BB. Proceeds obtained in the process of readying land for its intended purpose, such as from the sale of cleared timber, should be recognized immediately as income.
- CC. The costs of improvements to equipment incurred after its acquisition should be added to the asset’s cost if they increase future service potential.
- DD. All costs incurred in the construction of a plant building, from excavation to completion, should be considered as part of the asset’s cost.
4An entity installed an assembly line in Year 1. Four years later, US $100,000 was invested to automate the line. The automation increased the market value and productive capacity of the assembly line but did not affect its useful life. Proper accounting for the cost of the automation should be to
- AA. Report it as an expense in Year 5.
- BB. Establish a separate account for the US $100,000.
- CC. Allocate the cost of automation between the asset and accumulated depreciation accounts.
- DD. Debit the cost to the property, plant, and equipment account.
5An entity purchased a machine on January 1, Year 1, for US $1,000,000. The machine had an estimated useful life of 9 years and a residual value of US $100,000. The company uses straight-line depreciation. On December 31, Year 1, the machine was sold for US $835,000. The gain or loss that should be recorded on the disposal of this machine is
- AA. US $35,000 gain.
- BB. US $65,000 loss.
- CC. US $65,000 gain.
- DD. US $165,000 loss.
6Which of the following is not an appropriate basis for measuring the historical cost of property, plant, and equipment?
- AA. Delivery and handling costs and installation costs of a productive asset should be included in the asset’s cost.
- BB. The cost should include the purchase price without a deduction for trade discounts.
- CC. The costs of improvements to equipment incurred after its acquisition should be added to the asset’s cost if they provide future economic benefits exceeding the originally assessed standard of performance.
- DD. All costs incurred in the construction of a plant building, from excavation to completion, should be considered as part of the asset’s cost.
7An entity sells a piece of machinery, for cash, prior to the end of its estimated useful life. The sale price is less than the carrying amount of the asset on the date of sale. The entry that the entity uses to record the sale is
- AA.
Cash
Accumulated depreciation -- machinery
Loss on disposal of machinery
Machinery - BB.
Cash
Accumulated depreciation -- machinery
Gain on disposal of machinery
Machinery - CC.
Cash
Expense -- disposal of machinery
Accumulated depreciation -- machinery
Machinery - DD.
Cash
Machinery
Accumulated depreciation -- machinery
Gain on disposal of machinery
- AA.
8On January 1, Year 1, an entity purchased an abandoned quarry for US $1,200,000 to be used as a landfill to service its trash collection contracts with nearby cities for the next 20 years. The entity depletes the quarry using the units-of-production method based on a surveyor’s measurements of volume of the quarry’s pit. This amount was 500,000 cubic yards when purchased and 350,000 cubic yards at year-end Year 1. What is the net amount that should be shown on the entity’s December 31, Year 1, statement of financial position for the quarry?
- AA. US $1,200,000
- BB. US $1,140,000
- CC. US $840,000
- DD. US $360,000
9A new machine has an initial cost of US $300,000, an estimated useful life of 2,000 hours of use over a 3-year period, and no estimated residual value. Usage rates are estimated as 500 hours in the first year, 700 hours in the second year, and 800 hours in the third year. Depreciation expense in Year 1 under the units-of-production method of depreciation will be
- AA. US $25,000
- BB. US $75,000
- CC. US $100,000
- DD. US $105,000
10A company uses straight-line depreciation for financial reporting purposes, but uses accelerated depreciation for tax purposes. Which of the following account balances would be lower in the financial statements used for tax purposes than it would be in the general purpose financial statements?
- AA. Accumulated depreciation.
- BB. Cash.
- CC. Retained earnings.
- DD. Gross property, plant, and equipment.
11What is the journal entry recorded upon the sale of an item of property, plant, and equipment (PPE) that was sold for cash in excess of its carrying amount?
- AA. No journal entry is required.
- BB. Debit cash
Debit accumulated depreciation
Debit income on disposal of PPE
Credit PPE - CC. Debit cash
Debit PPE
Credit accumulated depreciation
Credit income on disposal of PPE - DD. Debit cash
Debit accumulated depreciation
Credit PPE
Credit income on disposal of PPE
12An entity sold a depreciable asset at the end of the fifth year of its estimated 10-year useful life. The original cost of the asset was US $100,000, and it was being depreciated on the straight-line basis. If the asset was sold for US $80,000, the gain on the sale will be
- AA. US $20,000
- BB. US $25,000
- CC. US $30,000
- DD. US $50,000
13Which of the following is not considered to be an intangible asset?
- AA. Goods on consignment.
- BB. Patents.
- CC. Copyrights.
- DD. Trademarks.
14Which of the following statements is false?
- AA. The balance sheet provides information useful for assessing future cash flows, liquidity, and long-term solvency.
- BB. Current assets include cash and all other assets expected to become cash or be consumed within one year (or within the operating cycle, whichever is longer).
- CC. Investments are classified as current if management intends to liquidate the investment in the near future.
- DD. Fixed assets consist of assets that a retail or wholesale company acquires for resale or goods that manufacturers produce for sale.
15Current liabilities include which of the following items?
I. Obligations due on demand within 1 year
II. Obligations callable at any time by the creditor
III. Obligations that will be replaced by other current liabilities- AA. I and II only.
- BB. I and III only.
- CC. II and III only.
- DD. I, II, and III.
16Buc Co. receives deposits from its customers to protect itself against nonpayments for future services. These deposits should be classified by Buc as
- AA. A contract liability.
- BB. Revenue.
- CC. A deferred credit deducted from accounts receivable.
- DD. A contract asset.
17How would the proceeds received from the advance sale of nonrefundable tickets for a theatrical performance be reported in the seller’s financial statements before the performance?
- AA. Revenue for the entire proceeds.
- BB. Revenue to the extent of related costs expended.
- CC. Unearned revenue to the extent of related costs expended.
- DD. Unearned revenue for the entire proceeds.
18A retail store received cash and issued a gift certificate that is redeemable in merchandise. When the gift certificate was issued, a
- AA. Deferred revenue should be decreased.
- BB. Deferred revenue should be increased.
- CC. Revenue should be decreased.
- DD. Revenue should be increased.
19Which of the following statements is correct regarding deferred revenues recorded by a company that provides services to customers?
- AA. Deferred revenue is a liability until the service has been performed.
- BB. Deferred revenues represent revenues recognized but not yet received in cash.
- CC. Deferred revenues result from services that have been performed but have not been billed.
- DD. A deferred revenue on the books of one company is an accrued expense on the books of another company.
20Long-term obligations that are or will become callable by the creditor because of the debtor’s violation of a provision of the debt agreement at the balance sheet date should be classified as
- AA. Long-term liabilities.
- BB. Current liabilities unless the creditor has waived the right to demand repayment for more than 1 year from the balance sheet date.
- CC. Contingent liabilities until the violation is corrected.
- DD. Current liabilities unless it is reasonably possible that the violation will be corrected within the grace period.
21A cable television entity receives deposits from customers that are refunded when service is terminated. The average customer stays with the entity 8 years. How should these deposits be shown on the financial statements?
- AA. Operating revenue.
- BB. Other revenue.
- CC. Paid-in capital.
- DD. Liability.
22The relationship between the present value of a future sum and the future value of a present sum can be expressed in terms of their respective interest factors. If the present value of US $200,000 due at the end of 8 years, at 10%, is US $93,300, what is the approximate future value of US $200,000 invested for the same length of time and at the same rate?
- AA. US $93,300
- BB. US $200,000
- CC. US $293,300
- DD. US $428,724
23Risoner Company plans to purchase a machine with the following conditions:
Purchase price = US $300,000.
The down payment = 10% of purchase price with remainder financed at an annual interest rate of 16%.
The financing period is 8 years with equal annual payments made every year.
The present value of an ordinary annuity of US $1 per year for 8 years at 16% is 4.3436.
The annual payment (rounded) is- AA. US $39,150
- BB. US $43,200
- CC. US $62,160
- DD. US $69,067
24On September 1, Year 1, an entity purchased a new machine that it does not have to pay for until September 1, Year 3. The total payment on September 1, Year 3, will include both principal and interest. Assuming interest at a 10% rate, the cost of the machine will be the total payment multiplied by what time value of money factor?
- AA. Present value of annuity of US $1.
- BB. Present value of US $1.
- CC. Future amount of annuity of US $1.
- DD. Future amount of US $1.
25On July 1, Goblette Company sold some machinery to another company. The two companies entered into an installment sales contract at a predetermined interest rate. The contract required 5 equal annual payments with the first payment due on July 1, the date of sale. What present value concept is appropriate for this situation?
- AA. Present value of an annuity due of US $1 for 5 periods.
- BB. Present value of an ordinary annuity of US $1 for 5 periods.
- CC. Future amount of an annuity due of US $1 for 5 periods.
- DD. Future amount of US $1 for 5 periods.
Información
- Descripción
- CIA Part 3 SU 9 Test sobre SU 9.2, creado por Sadan Dahal el 20/06/2020.
- Autor
- Sadan Dahal
- Idioma
- English
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