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(Acct102)[2009](sum)quiz~ma_yxf^_10013.pdf
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ACCT 102 - Introduction to Accounting

Quiz 2 C Summer 2009




NAME: .

STUDENT #: .






General Instructions:

1. Please verify that there are 10 pages including this cover page.

2. Please use non-erasable pen for answering all questions.

3. You have about 60 minutes to write the quiz.

4. Please do NOT engage in any dishonest behaviors during the quiz. Otherwise, you will get zero mark for the quiz.


Multiple Choice Questions (20 Marks)
Please choose the ONLY ONE correct answer to each question.

1. Depreciation: ( ) A. Measures the decline in market value of an asset. B. Measures physical deterioration of an asset. C. Is the process of allocating to expense the cost of a plant asset. D. Is an outflow of cash from the use of a plant asset. E. Is applied to land.
2. Nelson Company purchased equipment on July 1 for $27,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's salvage value is $3,500, the amount of monthly depreciation expense Nelson should recognize is: ( ) A. $2,400 B. $ 200 C. $4,800 D. $ 400 E. $ 450
(27,500 - 3,500) / 60 months = $400
3. A total asset turnover ratio of 3.5 indicates that: ( ) A. For every $1 in sales, the firm acquired $3.50 in assets during the period. B. For every $1 in assets, the firm produced $3.50 in net sales during the period. C. For every $1 in assets, the firm earned gross profit of $3.50 during the period. D. For every $1 in assets, the firm earned $3.50 in net income. E. For every $1 in assets, the firm paid $3.50 in expenses during the period.
4. A depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a (an): ( ) A. Accelerated depreciation method. B. Book value depreciation method. C. Straight-line depreciation method. D. Units-of-production depreciation method. E. Unrealized depreciation method.
5. Intangible assets include: ( ) A. Patents. B. Copyrights. C. Trademarks. D. Goodwill. E. All of these.

6. A company receives a 10%, 90-day note for $1,500. The total interest due on the maturity date is: ( ) A. $ 50.00 B. $150.00. C. $ 75.00. D. $ 37.50. E. $ 87.50.
$1,500 x 0.10 x 90/360 = $37.50
7. A company has net sales of $900,000 and average accounts receivable of $300,000. What is its accounts receivable turnover for the period? ( ) A. 0.20. B. 5.00 C. 20.0 D. 73.0 E. 3.0
$900,000/$300,000 = 3.0
8. Cash, not including cash equivalents, includes: ( ) A. Postage stamps. B. Coins, currency, and checking accounts. C. IOUs. D. Two-year certificates of deposit. E. Money market funds.
9. Merchandise inventory: ( ) A. Is reported on the balance sheet as a current asset. B. Refers to products a company owns and intends