Reference no: EM131706159
Q1. Lomax Enterprises purchased a depreciable asset for $22,000 on March 1, 2008. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, 2011?
a. $5,000.00
b. $4,166.67
c. $16,666.68
d. $20,000.00
e. $19,166.67
Q2. The Inventory account is a controlling account for the inventory subsidiary ledger that contains a separate record for each separate product.
True
False
Q3. An asset can be disposed of by:
a. Discarding it.
b. Selling it.
c. Exchanging it for another asset.
d. Donating it to charity.
e. All of these.
Q4. Natural resources are reported on the balance sheet at cost plus accumulated depletion.
True
False
Q5. Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. On July 10, Newton received a check for the full amount of $3,000 from Best. On July 10, the entry or entries Newton makes to record the recovery of the bad debt is:
a. Accounts Receivable - P. Best.... 3,000
Allowance for Doubtful Accounts... 3,000
Cash.... 3,000
Accounts Receivable - P. Best.... 3,000
b. Cash....3,000
Bad Debts Expense.....3,000
c. Accounts Receivable - P. Best.... 3,000
Bad Debts Expense... 3,000
Cash.... 3,000
Accounts Receivable - P. Best.... 3,000
d. Allowance for Doubtful Accounts....3,000
Accounts Receivable - P. Best.... 3,000
Cash.... 3,000
e. Cash.... 3,000
Accounts Receivable - P. Best ....3,000
Q6. Depreciation measures the actual decline in market value of an asset.
True
False
Q7. Goods on consignment are goods shipped by their owner, called the consignee, to another party called the consignor.
True
False
Q8. A company factored $35,000 of its accounts receivable and was charged a 2% factoring fee. The journal entry to record this transaction would include a debit to Cash of $35,000, a debit to Factoring Fee Expense of $700, and credit to Accounts Receivable of $35,700.
True
False