39. Depletion is A) the amount of spoilage that occurs when natural resources ar

Question

39. Depletion is A) the amount of spoilage that occurs when natural resources are extracted B) a decrease in market value of natural resources. C) the allocation of the cost of natural resources to expense D) the method used to record unsuccessful patents. 40. Cost of goods sold is computed from the following equation: A) sales + gross profit n ending inventory+ beginning inventory B) sales f cost of goods purchased + beginning inventory fi ending inventory. C) beginning inventory n cost of goods purchased + ending inventory. D) beginning inventory + cost of goods purchased n ending inventory 41. If a retailer assesses a finance charge on the amount owed by a customer, Accounts Receivable is debited for the amount of the interest. A) True B) False 42. The maturity value of a S60.000, 10%, 60-day note receivable dated July 3 is A) $70,000. B) $61,000. C) $66,000. D) $60,000. 43. Which of the following is a true statement about inventory systems? A) B) C) D) A periodic system requires cost of goods sold be determined after each sale. A perpetual system determines cost of goods sold only at the end of the accounting period. Perpetual inventory systems require more detailed inventory records. Periodic inventory systems require more detailed inventory records. 44. Management should select the depreciation method that A) has been used most often in the past by the company. B) best measures the plant asset's contribution to revenue over its useful life. C) is easiest to apply D) best measures the plant asset's market value over its useful life. 45. Management may choose any inventory costing method it desires as long as the cost flow'assumption chosen is consistent with the physical movement of goods in the company. A) True B) False 46. During 2011, Yoder Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Yoder's income from operations is A) $18,000. B) $27,000. C) $90,000. D) $45,000. 47. The units-of-activity method is generally not suitable for A) buildings. B) airplanes. C) delivery equipment. D) factory machinery 48. Under the allowance method, Bad Debts Expense is debited when an account is deemed uncollectible and must be written off. A) True B) False

Explanation / Answer

39. (C)

40. (D) Cost of goods sold = Begnning inventory + purchase - ending inventory

41. (B) False as in accounts receivable only principal amt. will be shown.

42. (B) 61000

calculation is as follows -

60000*10%*60/360 + 60000

= 1000+60000

= 61000

43. perpetual inventory system requires more detailed inventory records

all option except (b) are looked wrong that's why opt option b.

44. (B)

45. (B) False

46. operating income = revenue - COGS - operating expense

= 90000 - 45000 - 18000

= 27000

option (B)

47. (A) Building because activity level are difficult to measure in building output.

48. (A) True

as bad debts expense A/c Dr.

To allowance for DD A?c

and for write off

Allowance for DD

To accounts receivable

In case of further clarification required please comment.

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