12 May (True or False)The consignor retains title to the transferred merchandise even though the g
(True or False)
The consignor retains title to the transferred merchandise even though the goods are possessed by
the sales agent.
2. As generally used in accounting, what is depreciation?
A. It is a process of asset valuation for balance sheet purposes.
B. It is a costing process for intangible assets.
C. It is used to indicate a decline in market value of a long-lived asset.
D. It is an allocation of cost to accounting periods.
E. None of these.
3. Annual sales were $1,600,000, and the January 1 Allowance for Uncollectibles had a credit balance
of $25,000. $18,600 of accounts were written off during the year. Using the percentage of sales
technique and a 2% rate, uncollectible accounts expense is:
A. $7,000.
B. $18,600.
C. $25,600.
D. $32,000.
E. None of these.
4. Using the straight-line method, how much interest income would be recognized for the 20X5 calendar year, for a $1,000, 5-year, 6% bond that was purchased for $960 on July 1, 20X4?
A. $52.
B. $60.
C. $68.
D. $100.
E. None of these.
5. (True or False)
Briefly stated gains on exchanges having commercial substance are ignored, while losses are recognized.
6. In evaluating a proposal to begin selling goods on credit, which of the following would not be a cause for concern?
A. The need to evaluate credit worthiness.
B. Forgoing use of funds during periods of credit extension to customers.
C. The reluctance of customers to take advantage of the service.
D. The risk of not collecting.
E. None of these.
7. On June 1, Sao Corporation issued $300,000 of 9%, 5-year bonds. The bonds which were issued at 97, pay interest on January 1 and June 1. The entry to record issuance of the bonds includes:
A. a credit to Bonds Payable of $291,000.
B. a debit to Cash of $300,000.
C. a credit to Interest Payable of $9,000.
D. a debit to Discount on Notes Payable of $9,000.
E. None of these.
8. The September 30 physical inventory appropriately included $3,800 of merchandise that was not recorded as a purchase (on account) until October. What effect will this error have on the September 30 assets, liabilities, and income for the month ending, respectively?
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