Acct 2301 – Flashcards
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Interest is usually associated with
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notes receivable
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Which of the following would require a compound journal entry?
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To record collection of accounts receivable when a cash discount is taken.
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If a company fails to record estimated bad debts expense,
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expenses are understated.
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A 60-day note receivable dated April 13 has a maturity date of
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June 12
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In a promissory note, the party making the promise to pay is called the maker
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True
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When a note is accepted to settle an open account, Note Receivable is debited for the note's
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Face Value
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Short-term notes receivable
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use the same estimations and computations as accounts receivable to determine cash realizable value
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When a note receivable is dishonored
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accounts receivable is debited if eventual collection is expected
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The average collection period is computed by dividing
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365 days by the accounts receivable turnover ratio
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The accounts receivable turnover ratio is computed by dividing
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net credit sales by average net accounts receivable
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The cost of equipment consists of the cash purchase price, freight charges, motor vehicle licenses and accident insurance on company vehicles.
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False-Motor vehicle licenses and accident insurance are not included in the cost of equipment
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The units-of-activity method can be used for airplanes, buildings, and furniture
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False-The units-of-activity method is generally not suitable for buildings or furniture.
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Ordinary repairs are fairly small amounts and are referred to as revenue expenditures. Ordinary repairs are
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referred to as revenue expenditures.
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Wells Company's delivery truck, with a cost of $56,000 was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $38,000. The company received $32,000 reimbursement from its insurance company. The gain or loss as a result of the fire was
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$14,000 gain
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Depletion expense is computed by multiplying the depletion cost per unit by the
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number of units sold
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On the balance sheet, natural resources may be described more specifically as all of the following except
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land improvements
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Miles Co. earned $250,000 net income last year and their net sales were $4,900,000. Beginning total assets were $12,250,000 and ending total assets $15,750,000. Compute the asset turnover ratio.
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.35 times.
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Which of the following would not be reported under the classification of Property, Plant, and Equipment?
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Patents
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The gain or loss on exchange of plant assets is the difference between the fair value and the cost of the asset given up.
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False-The gain or loss on exchange of plant assets is the difference between the fair value and the book value of the asset given up.
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A company decides to exchange its old machine and $55,000 for a new machine. The old machine has a book value of $45,000 and a fair value of $50,000 on the date of the exchange. The exchange has commercial substance. The cost of the new machine would be recorded at
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$105,000.
