Accounting I Final Exam

25 July 2022
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The accounting equation may be expressed as
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Assets āˆ’ Liabilities = Owner's Equity
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Transactions affecting owner's equity include
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owner's investments, owner's withdrawals, earning of revenues, and incurrence of expenses
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Which of the following is not a business transaction? receive cash for services to be rendered later make a sales offer sell goods for cash pay for supplies
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make a sales offer
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Which of the following is not a business transaction? Erin deposits $15,000 in a bank account in the name of Erin's Lawn Service. Erin pays her monthly personal credit card bill. Erin purchased hedge trimmers for her lawn service agreeing to pay the supplier next month. Erin provided services to customers earning fees of $600.
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Erin pays her monthly personal credit card bill
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Which of the following is a business transaction? purchase inventory on account plan advertising for upcoming sale submit estimate for construction project give employees a raise beginning next month
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purchase inventory on account
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The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)
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income statement
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Which of the following financial statements reports information as of a specific date? statement of cash flows income statement balance sheet statement of owner's equity
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balance sheet
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Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of owner's equity (OE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?
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I,OE, B
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The year-end balance of the owner's capital account appears in
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both the statement of owner's equity and the balance sheet
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Which of the following applications of the rules of debit and credit is true? increase Accounts Payable with a credit and the normal balance is a debit decrease Cash with a debit and the normal balance is a credit decrease Prepaid Insurance with a credit and the normal balance is a credit increase Equipment with a debit and the normal balance is a debit
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increase Equipment with a debit and the normal balance is a debit
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The process of initially recording a business transaction is called
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journalizing
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Which of the following is not a correct rule of debits and credits? Liabilities, revenues, and owner's equity are increased by credits. Assets are decreased by credits and have a normal debit balance. Assets, expenses, and withdrawals are increased by debits. The normal balance for revenues and expenses is a credit.
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The normal balance for revenues and expenses is a credit.
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The ____ is where a transaction can first be found in the accounting records.
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journal
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The process of recording a transaction in the journal is called
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journalizing
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Which of the following is not true with a double-entry accounting system? Each business transaction will have two debits. Every transaction affects at least two accounts. The accounting equation remains in balance. The sum of all debits is always equal to the sum of all credits in each journal entry.
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Each business transaction will have two debits
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The process of transferring the debits and credits from the journal entries to the accounts is called
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posting
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A trial balance is prepared to
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discover errors that affect the equality of debits and credits
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The revenue recognition concept
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determines when revenue is credited to a revenue account
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The matching concept
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states that the revenues and related expenses should be reported in the same period
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Using accrual accounting, revenue is recorded and reported only
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when the services are rendered without regard to when cash is received
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Using accrual accounting, expenses are recorded and reported only
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when they are incurred, whether or not cash is paid
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Prior to the adjusting process, accrued expenses have
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been incurred, not paid, and not recorded
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Prior to the adjusting process, accrued revenue has
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been earned and not recorded as revenue
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Deferred expenses is
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d. a cost not yet recorded as an expense but has been paid.
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Deferred revenue is revenue that is
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not earned but the cash has been received
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Adjusting entries are
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needed to bring accounts up to date and match revenue and expense
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Adjusting entries affect at least one
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income statement account and one balance sheet account
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Generally accepted accounting principles require that companies use the ____ of accounting.
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accrual basis
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Adjusting entries always include
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at least one income statement account and one balance sheet account
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Which of the following is considered to be unearned revenue? theater tickets sold last month for yesterday's performance theater tickets that were not sold for the current performance theater tickets sold for next month's performance theater tickets sold yesterday on credit for yesterday's performance
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theater tickets sold for next month's performance
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Which of the following is an example of accrued revenue? snow removal services that have been provided but have not been billed or paid snow removal services that have been paid for three months in advance snow removal services that has been provided and paid on the same day an agreement that has been signed for snow removal services for the next three months
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snow removal services that have been provided but have not been billed or paid
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Which of the following is considered to be an accrued expense? a computer technician has just signed an agreement with you regarding pricing for future work a computer technician has installed the latest software updates, but you have not received an invoice or made payment a computer technician has installed the latest software updates and was paid on the same day a computer technician has been paid in advance to install software updates as they become available
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a computer technician has installed the latest software updates, but you have not received an invoice or made payment
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Which account would normally not require an adjusting entry? Cash Accumulated Depreciation Wages Expense Accounts Receivable
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cash
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Which one of the accounts below would likely be included in an accrual adjusting entry? Insurance Expense Interest Expense Unearned Rent Prepaid Rent
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Interest Expense
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Which of the following accounts would likely be included in a deferral adjusting entry? Interest Revenue Unearned Revenue Salaries Payable Accounts Receivable
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unearned revenue
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Notes receivable due in 390 days appear on the
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balance sheet in the noncurrent assets section
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The balance sheet should be prepared
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after the income statement and the statement of owner's equity
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The classified balance sheet will show which asset subsections?
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current assets and property, plant, and equipment
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The post-closing trial balance differs from the adjusted trial balance in that it does not take into account closing entries include balance sheet accounts take into account adjusting entries include income statement accounts
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include income statement accounts
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A summary of selected ledger accounts appear below for Alberto's Plumbing Services for the current calendar year-end.
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$15,000
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The phase of accounting system installation in which the information needs of people in the organization are taken into account is
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analysis
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The subsidiary ledger that includes customer account activity is called the
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accounts receivable ledger
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At the end of the month, the total of the amount column of the revenue journal is posted as a
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debit to Accounts Receivable and a credit to Fees Earned
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Which of the following is recorded in the cash receipts journal?
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cash received on customer's account
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Some of the more common subsidiary ledgers are
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accounts receivable and accounts payable subsidiary ledgers
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Which of the following is not considered a special journal? purchases journal cash payments journal general journal cash receipts journal
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general journal
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What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?
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gross profit
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The primary difference between a periodic and perpetual inventory system is that a
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periodic system determines the inventory on hand only at the end of the accounting period
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Pierce Company sold to Stanton Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale?
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Accounts Receivable-Stanton, debit $19,600; Sales, credit $19,600, and Accounts Receivable-Stanton, debit $500; Cash, credit $500
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Who is responsible for the freight costs when the terms are FOB shipping point?
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the buyer
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The Corbit Corp. sold merchandise for $10,000 cash. The cost of the merchandise sold was $7,590. The journal entries to record this transaction under the perpetual inventory system would be
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Cash 10,000 Sales 10,000 Cost of Merchandise Sold 7,590 Merchandise Inventory 7,590
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The primary objectives of control over inventory are
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safeguarding inventory from damage and reporting inventory in the financial statements
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The inventory method that assigns the most recent costs to cost of merchandise sold is
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LIFO
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When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is:
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debit Cost of Merchandise Sold; credit Merchandise Inventory
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What is the major difference between the unadjusted trial balance and the adjusted trial balance?
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The adjusted trial balance includes the postings of the adjustments for the period in the balance of the accounts.
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When does an account become uncollectible?
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there is no general rule for when an account becomes uncollectible
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If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?
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Accounts receivable
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Other receivables includes all of the following except taxes receivable interest receivable notes receivable receivables from employees
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notes receivable
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Notes or accounts receivables that result from sales transactions are often called
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trade receivables
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The direct write-off method of accounting for uncollectible accounts
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is often used by small companies and companies with few receivables
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The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?
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debit Bad Debt Expense; credit Accounts Receivable
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If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
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Bad Debt Expense
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If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
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allowance for doubtful accounts
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On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the
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total estimated uncollectible accounts as of the end of the year
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A debit balance in the Allowance for Doubtful Accounts
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indicates that actual bad debt write-offs have exceeded previous provisions for bad debts
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The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles
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does not affect net income in the period it is collected
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A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is
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$10,150
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A characteristic of a fixed asset is that it is
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used in the operations of a business
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Which of the following should be included in the acquisition cost of a piece of equipment? testing costs prior to placing the equipment into production installation costs transportation costs All of these choices are correct.
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All of these choices are correct
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Accumulated Depreciation
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is a contra asset account
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Expenditures that add to the utility of fixed assets for more than one accounting period are
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capital expenditures
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A fixed asset's estimated value at the time it is to be retired from service is called
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residual value
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The most widely used depreciation method is
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straight-line
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The depreciation method that does not use residual value in calculating the first year's depreciation expense is
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double-declining-balance
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Expected useful life is
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estimated at the time that the asset is placed in service
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The calculation for annual depreciation using the units-of-output method is
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(Depreciable cost / Estimated output) Ɨ Actual yearly output
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The accumulated depletion account is
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reported on the balance sheet as a deduction from the cost of the mineral deposit
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The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called
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depletion
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The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is
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amortization
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On June 8, Smith Technologies issued a $75,000, 6%, 140-day note payable to Johnson Company. What is the due date of the note?
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October 26
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On June 8, Williams Company issued an $80,000, 5%, 120-day note payable to Brown Industries. Assuming a 360-day year, what is the maturity value of the note?
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$81,333
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When a borrower receives the face amount of a discounted note less the discount, the amount is known as
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the note proceeds
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Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90-day, discounted note payable of $100,000 is
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$1500
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Assuming a 360-day year, when a $50,000, 90-day, 9% interest-bearing note payable matures, total payment will be
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$51,125
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Which of the following are criteria for determining whether to record an asset as a fixed asset? must be long lived and used by the company in its normal operations must be short lived and tangible must be an investment and long lived must be tangible and an investment
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must be long lived and used by the company in its normal operations
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Anderson Co. issued a $50,000, 60-day, discounted note to National Bank. The discount rate is 6%. At maturity, assuming a 360-day year, the borrower will pay
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$50,000
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The current portion of long-term debt should
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be reclassified as a current liability
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The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n)
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liability
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Which of the following taxes would be deducted in determining an employee's net pay? FICA taxes FUTA taxes SUTA taxes All of these choices are correct.
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FICA taxes
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Which of the following taxes are employers required to withhold from employees? FICA tax federal unemployment tax state unemployment tax FICA tax, state, and federal unemployment tax
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FICA tax
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Which of the following will have no effect on an employee's take-home pay? unemployment tax social security tax number of exemptions claimed marital status
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unemployment tax
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Which of the following are included in the employer's payroll taxes? social security taxes all are included in employer taxes SUTA taxes FUTA taxes
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all are in included in employer taxes
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Which of the following is required to be withheld from employee's gross pay? only state unemployment compensation tax only federal unemployment compensation tax only federal income tax both federal and state unemployment compensation taxes
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only federal income tax
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Payroll entries are made with data from the
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payroll register