Accounting: MBA 5100 (As much as I
could place in here)
Intangible assets with identifiable useful lives are - correct answer amortized over the shorter of their
useful or legal lives
shown in the asset section of the balance sheet
The seller of a bond is called the ___ while the buyer of a bond is called the ___. - correct answer Issuer
Bondholder
Fred's Fans purchased two identical fans for resale. Fan 1 was purchased in April and cost $76. Fan 2 was
purchased in May and cost $80. One of the fans was sold in June for $100. Which inventory cost flow
method would result in a $20 gross margin? - correct answer Last-in, first out
$100 - $80 = $20
The cost of a long-term asset includes - correct answer Installation costs
Sales tax
Purchase price
Realtor's and attorney fee's
Given an accounts receivable turnover ratio of 15.5, ending accounts receivable of $150,000, and
average accounts receivable of $140,000, the average days to collect receivables is ______ days. - correct
answer average days to collect receivables = (365/account receiv turnover)
,(365/15.5) = 23.54 days
straight-line depreciation method - correct answer (cost - Salvage value) / Useful life years
The Black Limo Company (BLC) purchased a limo on January 1 of Year 1. The limo cost $48,000. It had an
expected useful life of 4 years and a $8,000 salvage value. Assuming BLC uses straight-line depreciation,
cash flow from operating activities shown on the Year 2 statement of cash flows is - correct answer $0
The cash paid for the limo would have been shown on the Year 1 cash statement as an investing activity.
There is no cash flow associated with the recognition of depreciation.
But, the yearly depreciation amount would be $10,000. ((Cost - Salvage value) / life years)
Inventory Turnover: Number of times, ON AVERAGE, that inventory is replaces during the year. - correct
answer cost of goods sold / average inventory
The gain or loss on the disposal of an asset is equal to the sales price minus - correct answer Sales price
minus - Book value
Cost of goods available for sale is allocated between - correct answer Ending inventory and cost of goods
sold
When an intangible asset with an identifiable useful life is amortized - correct answer Liabilities are not
affected
Cash flow is not affected
Net income decreases
Which of the following statements are true? - correct answer The amount due at bond maturity is called
the face value of the bond.
, A bond certificate describes the company's obligation to repay the principal.
Cash interest payments are based on the stated interest rate.
Recognizing accrued interest expense affects the - correct answer Income statement
Balance sheet
NOT THE STATEMENT OF CASH FLOWS
Companies that use LIFO for income tax reporting must use the same inventory cost flow method for
their financial statements. - correct answer True
Companies using LIFO for tax reporting are also required to use LIFO for financial reporting.
Because it is highly liquid, inventory is generally presented above accounts receivable on the balance
sheet. - correct answer False
Inventory is less liquid than accounts receivable (also cash, securities, ect) so it is below, not above.
Kate Company submitted an offer to purchase a plot of land that was listed at $120,000. Kate's offer was
10% below the list price and was accepted. Kate paid $10,000 to remove an old structure in order to
make the land ready for use as a building site. Title and attorney fees amounted to $3,000. Annual
property taxes amounted to $5,000 per year. Based on this information, the cost of the land as shown on
the balance sheet equals - correct answer $120,000 List price × 90% = $108,000 purchase price +
$10,000 structure removal + $3,000 title and attorney fees
$108,000 + $10,000 + $3,000 = $121,000
The annual tax fee happens at end of the year.
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