Posted: August 3rd, 2017

The Value of Money

Required

1. After the mailroom employee opens the cash receipts, the remittance advices go to the

A. bank. B. controller. C. accounting department. D. treasurer.

2. The maturity value equals

A. the interest due minus interest paid. B. the principal plus all interest due. C. the principal plus interest paid. D. the interest due by the maturity date.

3. The following is selected data for Allied Industries: What is the return on assets (rounded to the nearest tenth of a percent) for 2014? Allied Industries 2014 2013 Sales $1,642,000 $1,743,000 Net Income $173,000 $191,000 Total Current Assets $177,000 $163,000 Property, Plant, and Equipment $724,000 $644,000

A. 19.2 B. 23.9 C. 25.3 D. 20.3

4. The processing of credit card and debit card transactions is generally done

A. over the Internet. B. at the retail site. C. at the financial institution of the retailer. D. by hired third parties.

5. A new vehicle was purchased on January 1 for $38,000. It has a salvage value of $7,000 and a useful life of 5 years. Using the straight-line method, how much will the depreciation expense for the vehicle be for the first year (to the nearest dollar)?

A. $633 B. $517 C. $7,600 D. $6,200

6. ACME Corporation lent $25,000 to Hastings, Inc. for 75 days at 7% interest on November 22, 2014. How much interest will have accrued to ACME Corporation on December 31, 2014, assuming a 360-day year?

A. $189.58 B. $204.52 C. $175.00 D. $364.58

7. Which of the following is a tangible asset?

A. Goodwill B. Franchise C. Copyright D. Land

8. The ________ verifies the amount of the deposit and the total amount posted to the cash account.

A. controller B. bank C. treasurer D. accounting department

9. Quick ratio is another name for the _______ ratio.

A. net B. current C. acid-test D. unadjusted

10. On January 1, $400,000 of 12%, 10-year bonds were sold for $380,000. The bonds require semiannual interest payments on June 30 and December 31. The journal entry for the June 30 interest payment is

A. debit Interest expense $23,000; debit Discount on bonds payable, $1,000; credit Cash, $24,000. B. debit Interest expense $25,000; credit Discount on bonds payable, $1,000; credit Cash, $24,000. C. debit Interest expense $25,000; credit Cash, $25,000. D. debit Interest expense $24,000; credit Cash, $24,000.

11. Fixed assets are also called _______ assets, or tangible assets.

A. natural B. plant C. property D. saleable

12. A three-month note dated June 12 will mature on

A. September 12. B. September 30. C. September 1. D. June 12.

13. Proceeds from credit card and debit card transactions are generally deposited into a business’s bank account within

A. three to five days. B. one to three days. C. a week. D. a month.

14. Subway restaurants and the Seattle Mariners are both examples of

A. copyrighted companies. B. franchises. C. trademarked entities. D. patents.

15. At the end of a/ an _______ lease, the lessee will return the asset to the lessor.

A. transferring B. incomplete C. operating D. capital

16. Under the allowance method, recording the receipt of cash after an account has been written off first requires that you

A. reinstate the customer’s account. B. debit Allowance for Doubtful Accounts. C. debit Bad Debt Expense. D. audit the customer’s account.

17. A company signs a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the company owe using a 360-day year?

A. $315.00 B. $39.38 C. $38.84 D. $354.38 End of exam

18. Renaud, Inc. has credit sales of $85,000 for the period. The balance in Allowance for Doubtful Accounts is a debit of $817. If Renaud uses the aging method to estimate uncollectible accounts and an aging of accounts receivable reflected an estimated amount of uncollectible accounts of $6,342, what is the credit to Allowance for Doubtful Accounts?

A. $4,250 B. $6,342 C. $5,525 D. $7,159

19. If an asset produces more revenue in its early years, the depreciation method best suited for this asset is the

A. double-declining balance method. B. expense method. C. units-of-production method. D. straight-line method.

20. Interest and dividends earned during the period are reported on the income statement for which marketable securities?

A. Trading securities B. All types of securities C. Held-to-maturity securities D. Available-for-sale securities