Questions I don’t get from final

| June 9, 2016

Question
1. Budget Auto signed a $45,000, 8%, 30-year installment note on November 1, 2014. The note requires semiannual payments of $750 plus interest on May 1 and November 1 of each year. How will Budget Auto classify this loan on its December 31, 2014 Balance Sheet?

A. Current portion of long-term debt, $0; long-term debt, $45,000

B. Current portion of long-term debt, $1,500; long-term debt, $43,500

C. Current portion of long-term debt, $750; long-term debt, $44,250

D. Current portion of long-term debt, $45,000; long-term debt, $0

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

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

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

A. debit Bad Debt Expense. B. debit Allowance for Doubtful Accounts.

C. reinstate the customer’s account. D. audit the customer’s account.

4. Haskins, Inc. has total assets of $600,000, total liabilities of $175,000, and total stockholders’ equity of $425,000. What is Haskins’ debt ratio?

A. 17.1% B. 29.2% C. 70.8% D. 41.2%

5. Capital leases are most similar to

A. accounts payable. B. unearned revenue.

C. mortgage notes. D. regular notes payable.

6. Skymaster, Inc. has cash of $33,000, net accounts receivable of $41,000, short-term investments of $15,000, and inventory of $25,000. It also has $30,000 in current liabilities and $50,000 in long-term liabilities. What is the current ratio for Skymaster, Inc.?

A. 3.80 B. 2.47 C. 1.48 D. 1.43

7. Subtracting accumulated depletion from the asset account coal mine yields the

A. net book value. B. original cost.

C. current period’s depletion expense. D. current market value.

8. Which of the following would not be considered a cash equivalent?

A. Certificates of deposits B. Treasury notes C. Time deposits D. Coin

9. 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. $364.58 C. $204.52 D. $175.00

10. A company signs a note payable for $3,000 at 9% for 45 days. How much interest will the company owe using the 360-day year?

A. 39.38 B 315 C 354.38 D 38.84

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