Acc201 test 3

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25 Questions - Developed by: Karli - Developed on: - 2.253 taken

Test 3

  • 1
    The cost of purchased building includes all of the following except
    Closing costs
    All of these are included
    Remodeling costs
    Real estate brokers commission
  • 2
    A company purchased land for $80k cash. real estate brokers' commission was $5k and $7k was spent for demolishing an old building on the land before construction of a new building could start. under the cost principle, the cost of land would be recorded at
  • 3
    Which of the following items is not considered a part of the cost of a truck purchased for business use?
    Sales tax
    Freight charges
    Truck license
    Cost of lettering on side of truck
  • 4
    Which of the following assets does not decline in service potential over the course of its useful life?
  • 5
    The four subdivisions for plant assets are
    Land, land improvements, buildings, and equipment
    Property, plant, equipment and land
    Furnishings and fixtures, land, building, equipment
    Intangibles, land, buildings, and equipment
  • 6
    All of the following are reported as current liabilities except
    Unearned revenues
    Bonds payable
    Notes payable
    Accounts payable
  • 7
    The relationship between current liabilities and current assets is
    Called the matching principle
    Useful in evaluating a company's liquidity
    Useful in determining income
    Useful in determining the amount of a company's long-term debt
  • 8
    Most companies pay current liabilities
    Out of current assets
    By issuing interest-bearing notes payable
    By creating long-term liabilities
    By issuing stock
  • 9
    A current liability is a debt that can reasonably be expected to be paid
    Out of currently recognized revenues
    Between 6 months and 18 month
    Within one year or the operating cycle, whichever is longer
    Out of cash currently on hand
  • 10
    Liabilities are classified on the balance sheet as current or
  • 11
    From a liquidity standpoint, it is more desirable for a company to have current
    Liabilities exceed long-term liabilities
    Assets exceed current liabilities
    Assets equal current liabilities
    Liabilities exceed current assets
  • 12
    The relationship of current assets to current liabilities is used in evaluating a company's
    Short-term debt paying ability
    Revenue-producing ability
    Long-range solvency
    Operating cycle
  • 13
    Which of the following is usually not an accrued liability?
    Taxes payable
    Interest payable
    Wages payable
    Notes payable
  • 14
    In most companies, current liabilities are paid within
    The operating cycle out of current assets
    One year or the operating cycle out of current assets
    One year through the creation of other current liabilities
    The operating cycle through the creation of other current liabilities
  • 15
    The entry to record the issuance of an interest-bearing note credits Notes Payable for the note's
    Maturity value
    Face value
    Cash realizable value
    Market value
  • 16
    Which one of the following is a privately held corporation?
    Cargill Inc
    Caterpillar Inc
    General Electric
  • 17
    The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is
    The partnership
    The corporation
    The sole proprietorship
    Not known
  • 18
    Under the corporate form of business organization
    Stockholders wishing to sell their corporation shares must get the approval of other stockholders
    The corporation's life is stipulated in its charter
    Stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation
    A stockholder is personally liable for the debts of the corporation
  • 19
    Stockholders of a corporation directly elect
    The treasurer of the corporation
    The president of the corporation
    All of the employees of the corporation
    The board of directors
  • 20
    The chief accounting officer in a company is known as the
  • 21
    A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a
    Corporation's temporary accounts are closed at the end of the accounting period
    Corporation is organized for the purpose of making a profit
    Corporation is subject to more federal and state government regulations
    Corporation is an accounting economic entity
  • 22
    Which of the following would not be considered an advantage of the corporate form of organization?
    Government regulation
    Continuous life
    Separate legal existence
    Limited liability of owners
  • 23
    The concept of an "artificial being" refers to which form of business organization?
    Limited partnership
    Sole proprietorship
  • 24
    The two ways that a corporation can be classified by purpose are
    Profit and not-for-profit
    Publicly held and privately held
    State and federal
    General and limited
  • 25
    The two ways that a corporation can be classified by ownership are
    Publicly held and privately held
    Inside and outside
    Majority and minority

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