Reference no: EM132706244

Questions -

Q1. Huffle Buff Inc. is in need of cash to cover its operating expenses for the year. The company decided to sell a portion of its accounts receivable to a commercial bank in exchange of cash. What method has Huffle used in converting its accounts receivable into cash?

a. Pledging

b. Discounting

c. Factoring

d. Exchanging

Q2. On March 1, 2020, Sam Ventura has $5,000 of outstanding accounts receivable to Dwight Company. Dwight's year end is December 31. Sam cannot pay the amount immediately but is willing to sign a promissory note. The interest is 6% per annum, to be collected when the note is due. Sam promises to pay on March 1, 2021. The entry to record the conversion of the accounts receivable to a note receivable on March 1, 2020 is:

a. Debit Accounts Receivable $5,000, Credit Allowance for Doubtful Accounts $5,000

b. Debit Accounts Receivable $5,000, Credit Notes Receivable $5,000

c. Debit Notes Receivable $5,000, Credit Cash $5,000

d. Debit Notes Receivable $5,000, Credit Accounts Receivable $5,000

Q3. Which of the following classification of long-term assets is incorrect?

a. Long-lived assets that are held for sale to customers but not used in normal operations are classified as merchandise inventory.

b. Tangible assets that last longer than one year and are used in normal operations are classified as part of property, plant and equipment.

c. Land that is not used for daily operations but is held for resale or future expansion is classified on the balance sheet as a long-term investment. The land holds a building that is used in normal operations.

d. None of the available choices

Q4. EasyGold Inc. has a natural resource with a total cost of $1,200,000 and a residual value of $200,000. It is expected to produce 5,000,000 units. The depletion rate per unit is:

a. 20 cents per unit

b. 4 cents per unit

c. $2 per unit

d. 24 cents per unit

Q5. Venus Company plans to pay its staff a bonus equal to 5% of the company's net income. Venus estimates to earn an income of $280,000. Record the employee bonus payable.

a. Debit Employee Bonus Expense $7,000, Credit Accounts Payable $7,000

b. Debit Employee Bonus Payable $14,000, Credit Cash $14,000

c. Debit Employee Bonus Expense $14,000, Credit Employee Bonus Payable $14,000

d. Debit Employee Bonus Payable $7,000, Credit Accounts Payable $7,000

Q6. Zilong Company received $3,600 on January 1, 2020 from a customer for annual magazine subscriptions. The magazines will be delivered on the 1st of each month, starting April 1. What is the journal entry to record the receipt of cash from the customer on January 1?

a. Debit Cash $3,600, Credit Unearned Revenue $3,600

b. Debit Cash $3,600, Credit Revenue $3,600

c. Debit Revenue $3,600, Credit Unearned Revenue $3,600

d. Debit Unearned Revenue $3,600, Credit Revenue $3,600