28 Jun HOW MANY OF THE FOLLOWING TRANSACTIONS WOULD DECREASE NET INCOME
How many of the following transactions would decrease net income
Declare and pay dividends
Pay employee salaries for the current period
Use supplies purchased on account
Provide services for cash
Pre-pay a 12-month insurance policy
Sell a machine for less than book value
A. 1
B. 2
C. 3
D.4
E. 5
26. Wildwood is a clothing store, and the following information is taken from its accounts:
Net Sales $104,000 Income tax expense $11,000
Operating expenses 22,000 Cost of goods sold 65,000
Unearned revenues $15,000 Nonoperating revenues 12,000
What is gross profit for Wildwood?
A. $18,000
B. $39,000
C. $104,000
D. $17,000
E. $29,000
27.Metal recycling equipment acquired on January 3, 2013, at a cost of $100,000, has an estimated useful life of 8 years and residual value of $20,000. Assuming the asset is depreciated using straight-line and the equipment is sold for $72,000 on July 1, 2015, what gain or loss needs to be recognized?
A. Gain $2,000
B. Gain $17,000
C. Loss $3,000
D. Loss $12,000
E. Gain $3,000
28.Which of the following statements accurately describes depreciation?
A. Accumulated depreciation is a contra asset with a debit balance
B. Depreciation has nothing to do with the value of the value of the asset
C. Depreciation allocates the cost of an asset over periods benefited
D. Two of the above are correct
E. All of the above are correct
29.Cut&Trim provides lawn maintenance services. On May 10, it agrees to complete $250 of services for Janet, and she agrees on that day and pays $100. On May 17, Cut& Trim completes the job and Janet pays the remaining $150. The receipt of $100 from Janet on May 10 would be recorded by Cut&Trim as a :
A. Debit to accounts receivable
B. Credit to cash
C. Debit to cash
D. Debit to unearned revenue
E. Two of the above are correct
30. A diesel-powered generator with a cost of $375,000 and estimated residual value of $30,000 is expected to have a useful life of 75,000 hours. During November, the generator was operated 700 hours. What is depreciation expense for the month?
A. $3,500
B. $3.220
C. $2,100
D. $268.33
E. None of the above
31. Stops purchases Gundy for a price of $350,000. At the time , Gundys assets have a fair value of $335,000 and liabilities have a fair value of $25,000. Gundy also has net income of $10,000 for the year. How much goodwill should Stoops record?
A. $15,000
B. $25,000
C. $40,000
D. $50,000
E. None of the above, good will cannot be accurately measured.
32.Douglas Inc., has the following accounts in the liabilities section of the balance sheet: sales tax payable, accounts payable, current portion of long-term debt, unearned revenues, and 5-year notes payable. How many of these are typically considered current liabilities?
A. 0
B. 2
C. 3
D. 4
E. 5
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