1. It is necessary for a company to use the same depreciation method for all of
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Question
1. It is necessary for a company to use the same depreciation method for all of its depreciable assets.
2. Receiving payment prior to delivering goods or services causes a current liability to be incurred.
3. An employee's take home pay is equal to gross pay less all voluntary deductions.
4. For paying their payroll, most employers use payroll checks drawn on a special bank account.
5. Organizational expenses are classified as intangible assets on the balance sheet.
6. The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.
7. A corporation has 10,000 shares of $100 par value stock outstanding. If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 40,000.
8. A bond is usually divided into a number of individual bonds of $500 each.
9. The total interest expense over the entire life of a bond is equal to the sum of the interest payments plus the total discount or minus the total premium related to the bond.
10. The special fund that is set aside to provide for the payment of bonds at maturity is called a sinking fund.
11. The amount of interest paid when buying a bond as an investment should be credited to Interest Revenue.
12. Investments in bonds that management intends to hold to maturity are called trading securities.
13. Investments in stocks that are expected to be held for the long term are listed in the stockholder's equity section of the balance sheet.
14. The Sarbanes-Oxley Act of 2002 was passed by Congress due to the public outcry after the financial scandals of the early 2000s.
15. If the balance in Cash Short and Over at the end of a period is a credit, it should be reported as an "other income" item on the income statement.
16. When the voucher system is used, the amount due on each voucher represents the credit balance of an account payable if the voucher is in full payment to a creditor.
17. Receivables not currently collectible are reported in the investments section of the balance sheet.
18. When companies sell their receivables to other companies, the transaction is called factoring.
19. At the end of a period, (before adjustment), Allowance for Doubtful Accounts has a credit balance of $250. The net credit sales for the period total $500,000. If the company estimates uncollectible accounts expense at 1% of net credit sales, the amount of bad debt expense to be recorded in an adjusting entry is $4,750.
20. When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.
TRUE OR FALSE??? FOR EACH
Explanation / Answer
1. true, same depreciation method for the classes of depreciable assets they come under
2. true, current liability in nature of advance received for the work to be done
3. true, take home pay = gross pay - federal tax - social security tax- medical securities and more on.
4. true, for employer, one bank would be considered for paying salarying to employee
5 .false, these expense goes to profit and loss account.
6. False, only declaration of dividend affect the equity by reducng of Retained earning , by payning dividend affect assets by reducing cash balance
7. false , splitting into 5 for 1 gives (10000 shares + 10000 shares * 5shares /1shares) =60000shares
8. True , it represent the par value of each bond
9. true , Cash payment = interest expens - amortisation of discount or + of premium
10. True, it is set set side for over the years for future capital expenses
11. False , it is charged as debit interest expenses
12. false, trading securities are held for profit purpose for the short term period.
13. True , it represents the half owner of the company and also known as common stock
15 false , a separate shortage or overage income statemetnt is prepared
16. True , by making full payment ,accounts payable will be on Debit
17. false , recievable reported in current assets
18. true, it is a debtor finance transaction , with other companies at discount
19. false , 1% of uncollectible will be during the year allowance for accounts receivable of $5000 plus $250, closing accounts for recievable $5250
20. false , cost of repalcement and restoration is not charged to building account
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