Question 1. Merchandise inventory is reported on the balance sheet in the section entitled _____.

current assets

fixed assets

current liabilities

stockholders’ equity

Question 2. Question : A machine with a useful life of 10 years and a residual value of $4000 was purchased for $30000. What is annual depreciation under the straight-line method?





Question 3. Question : The Drilling Company purchased a mining site for $500,000 on July 1, 2010. The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2010, the company extracted 6,500 tons of ore. The depletion expense for 2010 is





Question 4. Question : What type of account is Allowance for Doubtful Accounts?

Contra asset




Question 5. Question : Use the following data to calculate cost of merchandise sold under FIFO method.

September 1 Beginning Inventory 15 units @ $20

September 10 Purchases 20 units @ $25

September 20 Purchases 25 units @ $28

September 30 Ending Inventory 30 units





Question 6. Question : A 60-day, 10% note for $6,000 dated April 15 is received from a customer on account.

The face value of the note is _______.

: $6,100




Question 7. Question : In reference to a promissory note, the person who makes the promise to pay is called the _______.





Question 8. Question : The due date of a 60-day note dated July 12 is _______.

: September 11

September 8

September 9

September 10

Question 9. Question : A written promise to pay a sum of money on demand or at a definite time is called a (n) _______.




promissory note

Question 10. Question : A note receivable due in 90 days is listed on the balance sheet under _______.

long-term liabilities

fixed assets

current liabilities

current assets

Question 11. Question : A machine was purchased for $60,000. It has a useful life of 5 years and a residual value of $6,000. Under the straight-line method, what is annual depreciation expense?





Question 12. Question : A note receivable due in five years is listed on the balance sheet under the caption _______.


current assets

fixed assets

stockholders’ equity

Question 13. Question : Goodwill is _______.

amortized similar to other intangibles

only written down if an impairment in value occurs

charged to expense immediately

amortized over 40 years or its economic life, whichever is shorter

Question 14. Question : The two most widely used methods for determining the cost of inventory are _______.


FIFO and average cost

LIFO and average cost

gross profit and average cost

Question 15. Question : Salvage value has a similar meaning as _______.

residual value

scrap value

book value

both residual value and scrap value

Question 16. Question : Receivables are usually a significant portion of _______.

total current liabilities

total liabilities

total current assets

total assets

Question 17. Question : The inventory data for an item for November are:

Nov. 1 Inventory 25 units at $20

10 Purchased 30 units at $21

30 Purchased 10 units at $22

Sold 35 units

Using the last-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30?





Question 18. Question : Intangible assets are used in operations but _______.

cannot be specifically identified

cannot be sold

lack physical substance

cannot be long-lived

Question 19. Question : Book value is defined as _______.

current market value less residual value

cost less residual value

current market value less accumulated depreciation

cost less accumulated depreciation

Question 20. Question : To measure depreciation, all of the following must be known EXCEPT:

Market value

Residual value

Historical cost

Estimated life

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