Reference no: EM133188989

Question 1 - Lauter Tun Corporation acquired equipment on January 1, 2017, for $300,000. The equipment had an estimated useful life of 10 years and an estimated salvage value of $25,000. On January 1, 2020, Lauter Tun Corporation revised the total useful life of the equipment to 8 years and the estimated salvage value to be $10,000. Compute depreciation expense for the year ending December 31, 2020, if Lauter Tun Corporation uses straight-line depreciation.

A) $25,938

B) $38,500

C) $41,500

D) $43,500

Question 2 - Equipment with a carrying amount of $8,000 is sold for $1,000 cash. The statement of cash flows will report a:

A) $1,000 cash inflow in the operating activities section

B) $1,000 cash inflow in the investing activities section

C) $7,000 cash outflow in the operating activities section

D) $7,000 cash outflow in the financing activities section

Question 3 - The removal of an old building to make land suitable for its intended use is charged to:

A) land

B) land improvements

C) land improvements expense

D) renovation and restoration expense

Question 4 - Land is purchased for $60,000. Back taxes paid by the purchaser were $2,400, clearing and grading costs were $3,000, fencing costs were $2,500, and lighting costs were $500. What is the cost of the land?

A) $60,000

B) $65,400

C) $66,400

D) $68,400

Question 5 - One of the most common ways to "cook the books" with inventory is to:

A) overstate ending inventory

B) understate ending inventory

C) understate ending inventory unit prices

D) overstate cost of goods sold

Question 6 - On June 1, 2020, Destiny Ltd. received $3,600 for services to be performed evenly over the next twelve months. The adjusting entry on December 31, 2020, would include a:

A) debit to Cash for $3,600

B) debit to Service Revenue for $1,500

C) debit to Unearned Service Revenue for $1,500

D) debit to Unearned Service Revenue for $2,100

Question 7 - Honey Brown Inc. paid six months' rent in advance totalling $9,000. At the end of the first month, the adjusting entry would include a:

A) debit to Prepaid Rent for $7,500

B) debit to Prepaid Rent for $1,500

C) debit to Rent Expense for $7,500

D) debit to Rent Expense for $1,500

Question 8 - Shareholders' equity is often referred to as "net assets" and represents the residual amount of business assets that can be claimed by the owners.

(TRUE or FALSE)

Question 9 - The payment of the chief financial officer's salary would appear:

A) on the cash flow statement with the operating activities

B) on the balance sheet with the current liabilities

C) on the income statement with the revenues

D) on the income statement as part of cost of goods sold

Question 10 - Cash spent to purchase a new building would appear on the cash flow statement as:

A) a financing activity

B) an operating activity

C) an investing activity

D) a dividend activity