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Question(s) / Instruction(s):

An entity purchased a machine on January 1, 20XI for 1,000.000. The machine had an estimated useful life of 9 years and a residual value of 100,000. The company uses straight-line depreciation. On December 31, 20X4, the machine was sold for 535,000. The gain or loss that should be recorded on the

                a. 35,000 gain.   

                b. 65,000 loss.   

                c. 365,000 loss. 

                d. 465,000 loss. 

 

 

Question: 12

For the Asset Turnover ratio, which of the following best describes net assets?

                a. Fixed Assets+ Current assets.               

                b. Fixed Assets +Current assets – Current liabilities.        

                c. Current assets – Current liabilities.     

                d. Fixed assets + Current assets- Current liabilities- Long term Liabilities.               

Question: 13

The following information is available for an entity for the quarter ended March 31, of the current year:

Merchandise inventory, as of January 1 of the current year         30,000

Sales                                      200,000

Purchases                           190,000

The gross profit margin is normally 20% of sales. What is the estimated cost of the merchandise inventory at March 31, of the current year?

                a. 180,000           

                b. 60,000             

                c. 40,000              

                d. 20,000             

 

 

Question: 14

Which of the following headings best describes and measures gearing?

                a. Financial position (risk).           

                b. Liquidity.        

                c. Profitability.  

                d. Performance / efficiency.      

 

Question: 15

The following balances were reported by ABC Co. at December 31,1991 and 1990:

                                                12/31/91              12/31/90

Inventory                            $260,000              $290,000

Accounts payable            75,000                   50,000

ABC paid suppliers $ 490,000 during the year ended December 31, 1991. What amount should ABC report for cost of goods sold in 1991?

                a. $435,000         

                b. $545,000        

                c. $485,000         

                d. $495,000        

 

Question: 16

The purchase of fixed assets totaling $ 100 on account was incorrectly recorded as a debit to expense and a credit to cash. As a result of this error, which of the following statements is true?

                a. The trial balance will not balance.        

                b. Liabilities would be overstated.           

                c. Expenses would be understated.        

                d. Total assets would be understated.   

Question: 17

Which of the following statement best describes the accounting concept of going concern?

                a. Expenses and revenue are matched to the same time period in which they relate.     

                b. The business will continue to trade the foreseeable future.   

                c. When a business produces its financial statement it should always adopt a conservative figure              for profit and / or the valuation of its assets.         

                d. Items with a low value should not be reported separately in the financial accounts.   

Question: 18

For the ratio Return on Capital Employed, which of the following best describes capital employed?

Choose one answer.

                a. Share capital.               

                b. Share capital + Reserves.        

                c. Share capital + Current Assets.             

                d. Share capital + Fixed Assets. 

 

Question: 19

During 2005, ABC Co. purchased $ 960,000 of inventory. The cost of goods sold for 2005 was $ 900,000, and the ending inventory at December 31, 2005, was $ 180,000. What was the inventory turnover for 2005?

                a. 6.4    

                b. 6.0    

                c. 5.3     

                d. 5.0    

Question: 20

In a statement of cash flows (indirect method), depreciation expense should be presented as

                a. An inflow of cash.      

                b. An outflow of cash.   

 c. An addition to net profit in convening net profit or loss to net cash flows from operating activities.     

d. A deduction from net profit in converting net profit or loss to net cash flows from operating activities.             

 

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