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CHAPTER 9, 10, 11 TRUE FALSE

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Quiz on CHAPTER 9, 10, 11 TRUE FALSE, created by Natalie Balzert on 05/11/2014.
Natalie Balzert
Quiz by Natalie Balzert, updated more than 1 year ago
Natalie Balzert
Created by Natalie Balzert over 9 years ago
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Resource summary

Question 1

Question
ALL PLANT ASSETS (FIXED ASSETS) MUST BE DEPRECIATED FOR ACCOUNTING PURPOSES.
Answer
  • True
  • False

Question 2

Question
WHEN PURCHASING LAND, THE COSTS FOR CLEARING, DRAINING, FILLING, AND GRADING SHOULD BE CHARGED TO A LAND IMPROVEMENTS ACCOUNT.
Answer
  • True
  • False

Question 3

Question
WHEN PURCHASING DELIVERY EQUIPMENT, SALES TAXES AND MOTOR VEHICLE LICENSES SHOULD BE CHARGED TO DELIVERY EQUIPMENT.
Answer
  • True
  • False

Question 4

Question
LAND IMPROVEMENTS ARE GENERALLY CHARGED TO THE LAND ACCOUNT.
Answer
  • True
  • False

Question 5

Question
ONCE COST IS ESTABLISHED FOR A PLANT 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.
Answer
  • True
  • False

Question 6

Question
THE BOOK VALUE OF A PLANT ASSET IS ALWAYS EQUAL TO ITS FAIR MARKET VALUE.
Answer
  • True
  • False

Question 7

Question
RECORDING DEPRECIATION ON PLANT ASSETS AFFECTS THE BALANCE SHEET AND THE INCOME STATEMENT.
Answer
  • True
  • False

Question 8

Question
THE DEPRECIABLE COST OF A PLANT ASSET IS ITS ORIGINAL COST MINUS OBSOLESCENCE.
Answer
  • True
  • False

Question 9

Question
RECORDING DEPRECIATION EACH PERIOD IS AN APPLICATION OF THE EXPENSE RECOGNITION PRINCIPLE.
Answer
  • True
  • False

Question 10

Question
THE ACCUMULATED DEPRECIATION ACCOUNT REPRESENTS A CASH FUND AVAILABLE TO REPLACE PLANT ASSETS.
Answer
  • True
  • False

Question 11

Question
IN CALCULATING DEPRECIATION, BOTH PLANT ASSET COST AND USEFUL LIFE ARE BASED ON ESTIMATES.
Answer
  • True
  • False

Question 12

Question
USING THE UNITS-OF-ACTIVITY METHOD OF DEPRECIATING FACTORY EQUIPMENT WILL GENERALLY RESULT IN MORE DEPRECIATION EXPENSE BEING RECORDED OVER THE LIFE OF THE ASSET THAN IF THE STRAIGHT-LINE METHOD HAD BEEN USED.
Answer
  • True
  • False

Question 13

Question
SALVAGE VALUE IS NOT SUBTRACTED FROM PLANT ASSET COST IN DETERMINING DEPRECIATION EXPENSE UNDER THE DECLINING-BALANCE METHOD OF DEPRECIATION.
Answer
  • True
  • False

Question 14

Question
THE DECLINING-BALANCE METHOD OF DEPRECIATION IS CALLED AN ACCELERATED DEPRECIATION METHOD BECAUSE IT DEPRECIATES AN ASSET IN A SHORTER PERIOD OF TIME THAN THE ASSET'S USEFUL LIFE.
Answer
  • True
  • False

Question 15

Question
UNDER THE DOUBLE-DECLINING-BALANCE METHOD, THE DEPRECIATION RATE USED EACH YEAR REMAINS CONSTANT.
Answer
  • True
  • False

Question 16

Question
THE IRS DOES NOT REQUIRE THE TAXPAYER TO USE THE SAME DEPRECIATION METHOD ON THE TAX RETURN THAT IS USED IN PREPARING FINANCIAL STATEMENTS.
Answer
  • True
  • False

Question 17

Question
A CHANGE IN THE ESTIMATED USEFUL LIFE OF A PLANT ASSET MAY CAUSE A CHANGE IN THE AMOUNT OF DEPRECIATION RECOGNIZED IN THE CURRENT AND FUTURE PERIODS, BUT NOT TO PRIOR PERIODS.
Answer
  • True
  • False

Question 18

Question
A CHANGE IN THE ESTIMATED SALVAGE VALUE OF A PLANT ASSET REQUIRES A RESTATEMENT OF PRIOR YEARS' DEPRECIATION.
Answer
  • True
  • False

Question 19

Question
TO DETERMINE A NEW DEPRECIATION AMOUNT AFTER A CHANGE IN ESTIMATE OF A PLANT ASSET'S USEFUL LIFE, THE ASSET'S REMAINING DEPRECIABLE COST IS DIVIDED BY ITS REMAINING USEFUL LIFE.
Answer
  • True
  • False

Question 20

Question
ADDITIONS AND IMPROVEMENTS TO A PLANT ASSET THAT INCREASE THE ASSET'S OPERATING EFFICIENCY, PRODUCTIVE CAPACITY, OR EXPECTED USEFUL LIFE ARE GENERALLY EXPENSED IN THE PERIOD INCURRED.
Answer
  • True
  • False

Question 21

Question
A CURRENT LIABILITY MUST BE PAID OUT OF CURRENT EARNINGS
Answer
  • True
  • False

Question 22

Question
CURRENT LIABILITIES ARE EXPECTED TO BE PAID WITHIN ONE YEAR OF THE OPERATING CYCLE, WHICHEVER IS LONGER
Answer
  • True
  • False

Question 23

Question
THE RELATIONSHIP BETWEEN CURRENT LIABILITIES AND CURRENT ASSETS IS IMPORTANT IN EVALUATING A COMPANY'S ABILITY TO PAY OFF ITS LONG-TERM DEBT
Answer
  • True
  • False

Question 24

Question
A COMPANY WHOSE CURRENT LIABILITIES EXCEED ITS CURRENT ASSETS MAY HAVE A LIQUIDITY PROBLEM
Answer
  • True
  • False

Question 25

Question
NOTES PAYABLE USUALLY REQUIRE THE BORROWER TO PAY INTEREST
Answer
  • True
  • False

Question 26

Question
NOTES PAYABLE ARE OFTEN USED INSTEAD OF ACCOUNTS PAYABLE
Answer
  • True
  • False

Question 27

Question
A NOTE PAYABLE MUST ALWAYS BE PAID BEFORE AN ACCOUNT PAYABLE
Answer
  • True
  • False

Question 28

Question
A $60,000, 8%, 9-MONTH NOTE PAYABLE REQUIRES AN INTEREST PAYMENT OF $3,600 AT MATURITY
Answer
  • True
  • False

Question 29

Question
MOST NOTES ARE NOT INTEREST BEARING
Answer
  • True
  • False

Question 30

Question
WITH AN INTEREST-BEARING NOTE, THE AMOUNT OF CASH RECEIVED UPON ISSUANCE OF THE NOTE GENERALLY EXCEEDS THE NOTE'S FACE VALUE
Answer
  • True
  • False

Question 31

Question
INTEREST EXPENSE ON A NOTE PAYABLE IS ONLY RECORDED AT MATURITY
Answer
  • True
  • False

Question 32

Question
INTEREST EXPENSE IS REPORTED UNDER OTHER EXPENSES AND LOSSES IN THE INCOME STATEMENT
Answer
  • True
  • False

Question 33

Question
UNEARNED REVENUES SHOULD BE CLASSIFIED AS OTHER REVENUES AND GAINS ON THE INCOME STATEMENT
Answer
  • True
  • False

Question 34

Question
THE HIGHER THE SALES TAX RATE, THE MORE PROFIT A RETAILER CAN EARN
Answer
  • True
  • False

Question 35

Question
METROPOLITAN SYMPHONY SELLS 200 SEASON TICKETS FOR $50,000 THAT REPRESENTS A FIVE CONCERT SEASON. THE AMOUNT OF UNEARNED TICKET REVENUE AFTER THE SECOND CONCERT IS $20,000
Answer
  • True
  • False

Question 36

Question
DURING THE MONTH, A COMPANY SELLS GOODS FOR A TOTAL OF $108,000 WHICH INCLUDES SALES TAXES OF $8,000; THEREFORE, THE COMPANY SHOULD RECOGNIZE $100,000 IN SALES REVENUES AND $8,000 IN SALES TAX EXPENSE
Answer
  • True
  • False

Question 37

Question
CURRENT MATURITIES OF LONG-TERM DEBT REFERS TO THE AMOUNT OF INTEREST ON A NOTE PAYABLE THAT MUST BE PAID IN THE CURRENT YEAR
Answer
  • True
  • False

Question 38

Question
THE CURRENT RATIO PERMITS ANALYSTS TO COMPARE THE LIQUIDITY OF DIFFERENT SIZED COMPANIES
Answer
  • True
  • False

Question 39

Question
WORKING CAPITAL IS CURRENT ASSETS DIVIDED BY CURRENT LIABILITIES
Answer
  • True
  • False

Question 40

Question
FICA TAXES WITHHELD AND FEDERAL INCOME INCOME TAXES WITHHELD ARE MANDATORY PAYROLL DEDUCTIONS
Answer
  • True
  • False

Question 41

Question
A CORPORATION IS NOT AN ENTITY WHICH IS SEPARATE AND DISTINCT FROM ITS OWNERS.
Answer
  • True
  • False

Question 42

Question
A CORPORATION CAN BE ORGANIZED FOR THE PURPOSE OF MAKING A PROFIT OR IT MAY BE NOT-FOR-PROFIT.
Answer
  • True
  • False

Question 43

Question
A CORPORATION ACTS UNDER ITS OWN NAME RATHER THAN IN THE NAME OF ITS STOCKHOLDERS.
Answer
  • True
  • False

Question 44

Question
IF A CORPORATION PAYS TAXES ON ITS INCOME, THEN STOCKHOLDERS WILL NOT HAVE TO PAY TAXES ON THE DIVIDENDS RECEIVED FROM THAT CORPORATION.
Answer
  • True
  • False

Question 45

Question
A CORPORATION MUST BE INCORPORATED IN EACH STATE IN WHICH IT DOES BUSINESS.
Answer
  • True
  • False

Question 46

Question
A STICKHOLDER HAS THE RIGHT TO VOTE IN THE ELECTION OF THE BOARD OF DIRECTORS.
Answer
  • True
  • False

Question 47

Question
A PROXY IS A LEGAL DOCUMENT THAT INSTRUCTS A STOCKHOLDER'S AGENT HOW TO VOTE SHARES OF STOCK FOR THE STOCKHOLDER.
Answer
  • True
  • False

Question 48

Question
AS SOON AS A CORPORATION IS AUTHORIZED TO ISSUE STOCK, AN ACCOUNTING JOURNAL ENTRY SHOULD BE MADE RECORDING THE TOTAL VALUE OF THE SHARES AUTHORIZED.
Answer
  • True
  • False

Question 49

Question
THE PAR VALUE OF COMMON STOCK MUST ALWAYS BE EQUAL TO ITS MARKET VALUE ON THE DATE THE STOCK IS ISSUED.
Answer
  • True
  • False

Question 50

Question
WHEN NO-PAR VALUE STOCK DOES NOT HAVE A STATED VALUE, THE ENTIRE PROCEEDS FROM THE ISSUANCE OF THE STOCK BECOMES LEGAL CAPITAL.
Answer
  • True
  • False

Question 51

Question
A CORPORATION CAN ISSUE MORE SHARES THAN IT IS AUTHORIZED IN ITS CHARTER, IF THE BOARD OF DIRECTORS APPROVES OF AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES.
Answer
  • True
  • False

Question 52

Question
THE MARKET VALUE OF A CORPORATION'S STOCK IS DETERMINED BY THE NUMBER OF SHARES THAT THE CORPORATION HAS BEEN AUTHORIZED TO ISSUE.
Answer
  • True
  • False

Question 53

Question
STOCK CAN BE ISSUED ONLY IN EXCHANGE FOR CASH.
Answer
  • True
  • False

Question 54

Question
THE PAR VALUE OF STOCK ISSUED FOR NON-CASH ASSETS IS NEVER A FACTOR IN DETERMINING THE COST OF THE ASSETS RECEIVED.
Answer
  • True
  • False

Question 55

Question
THE ACQUISITION OF TREASURY STOCK BY A CORPORATION INCREASES TOTAL ASSETS AND TOTAL STOCKHOLDERS' EQUITY.
Answer
  • True
  • False

Question 56

Question
TREASURY STOCK SHOULD NOT BE CLASSIFIED AS A CURRENT ASSET.
Answer
  • True
  • False

Question 57

Question
TREASURY STOCK PURCHASED FOR $25 PER SHARE THAT IS REISSUED AT $20 PER SHARE, RESULTS IN A LOSS ON SALE OF TREASURY STOCK BEING RECOGNIZED ON THE INCOME STATEMENT.
Answer
  • True
  • False

Question 58

Question
TREASURY STOCK IS A CONTRA STOCLHOLDERS' EQUITY ACCOUNT.
Answer
  • True
  • False

Question 59

Question
THE NUMBER OF COMMON SHARES OUTSTANDING CAN NEVER BE GREATER THAN THE NUMBER OF SHARES ISSUED.
Answer
  • True
  • False

Question 60

Question
PREFERRED STOCK HAS CONTRACTUAL PREFERENCE OVER COMMON STOCK IN CERTAIN AREAS.
Answer
  • True
  • False
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