A company should choose a depreciation method
A company should choose a depreciation method that
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best allocates the original cost of the asset to the periods benefited by the use of the asset. |
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saves the most taxes. |
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minimizes net income. |
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shows the highest amount of net income. |
Goodwill can be recorded as an asset when a(n)
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business has above normal profitability compared to other businesses in its industry. |
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business can determine that it has created customer goodwill and name recognition. |
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offer is received to purchase the business at a price in excess of the value of the assets. |
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business is purchased and payment is made in excess of the value of the net assets. |
Current accounting standards indicate that the costs of intangible assets with an indefinite life, such as goodwill, should
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not be amortized. |
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be reported on the statement of retained earnings in the year in which acquired. |
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be amortized over a reasonable period of time not to exceed 40 years. |
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increase an expense account entirely in the year in which acquired. |
With respect to the statement of cash flows,
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repurchase of stock is a financing activity. |
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a stock split is a financing activity. |
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a stock dividend is an investing activity. |
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the declaration of a cash dividend account is an operating activity. |
When bonds are issued by a company, the recording of the transaction will include an
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increase in liabilities and a decrease in stockholders' equity. |
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increase in liabilities and an increase in stockholders' equity. |
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increase in assets and an increase in liabilities. |
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increase in assets and an increase in stockholders' equity. |
The Retained Earnings account balance for a large corporation is $10,000,000. This amount represents
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earnings that have not been distributed to shareholders. |
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cash in the bank. |
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the amount of cash available for dividends. |
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revenues for all past years of operations. |
All of the following are reasons for a company to repurchase its previously issued stock, except:
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to support the market price of the stock |
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to resell to employees |
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to increase the shares outstanding |
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for bonuses to employees |
Which one of the following is an investing activity of a business?
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Paying for purchases of inventory. |
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Issuing stock for cash. |
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Borrowing money from a bank. |
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Purchasing a manufacturing plant for cash. |
Which one of the following is an operating activity of a business?
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Paying for purchases of inventory. |
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Issuing stock for cash. |
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Borrowing money from a bank. |
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Purchasing a manufacturing plant. |
During December, Dobson Inc. purchased $800 of supplies for use in its business. At the end of December, 20% of the supplies were still on hand, but only 75% had been paid. What amounts will appear on the company's balance sheet on December 31?
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Supplies on Hand, $800; Accounts Payable, $600 |
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Supplies on Hand, $160; Accounts Payable, $200 |
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Supplies on Hand, $640; Accounts Payable, $200 |
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Supplies on Hand, $160; Accounts Payable, $800 |
All of the following are included in the acquisition cost of property, plant, and equipment except:
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transportation costs |
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taxes on the purchase |
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installation costs |
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maintenance costs |
The effect of recording depreciation for the year is a(n)
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decrease in assets and a decrease in net income. |
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decrease in assets but no change in owners' equity. |
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increase in assets and an increase in net income. |
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decrease in net income and no change in assets. |
Pat & Co. reported net income for the current year. Which of the following business transactions would cause cash from operating activities to be higher than the amount of net income?
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Cash dividends were paid to stockholders during the year. |
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Depreciation expense was recorded for the year. |
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A bank loan was repaid during the year. |
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Equipment was purchased for cash during the year. |
A company's balance sheet shows the account, Notes Payable. This resulted from a loan made by the company's bank. If the end-of-year balance in the notes payable account exceeds the beginning-of-year balance by $5,000, this is shown on the cash flow statement as an
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inflow of cash of $5,000 in the operating activities category. |
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outflow of cash of $5,000 in the operating activities category. |
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inflow of cash of $5,000 in the financing activities category. |
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outflow of cash of $5,000 in the financing activities category. |
On July 1, 2012, Watson Company received a $20,000 promissory note for services from Jeffs Company. The annual interest rate is 5%. Principal and interest are paid in cash at the maturity date of June 30, 2013. The effect on Watson's financial statements on July 1, 2012 is as follows.
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Assets increase; owners' equity increases. |
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Assets decrease and owners' equity decreases. |
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Assets decrease. |
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No net change in assets. |
During a period of increasing cost prices, which inventory costing method will yield the lowest cost of goods sold?
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Any method in which the company uses a periodic inventory system. |
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FIFO |
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LIFO |
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weighted average cost |
The ending inventory balance represents
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expired costs and is reported on the balance sheet as an asset. |
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the cost of goods sold during the current period and is reported on the balance sheet as an asset. |
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expired costs and is reported on the income statement as an expense. |
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unexpired costs and is reported on the balance sheet as an asset. |
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Solution: A company should choose a depreciation method