Acc-504- 1. the modified accelerated cost recovery system (macrs)
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ACC-504-1. The Modified Accelerated CostRecovery System (MACRS) specifies which of the following depreciation methodsfor buildings?A. 150% declining-balance.B. Double-declining-balance.C. Straight line.D. Buildings are not depreciable assets.2. The Modified Accelerated CostRecovery System (MACRS) specifies which of the following depreciation methodsfor land?A. 150% declining-balance.B. Double-declining-balance.C. Straight line.D. Land is not adepreciable asset.3. If an organization has an obligationto pay $5,000 to a supplier two years from now, the present value of theobligation:A. is less than $5,000.B. is $5,000.C. is more than $5,000.D. could be calculated using an annuity factor from the present valuetables.4. Depreciation, in accounting, is a process that results in:A. depreciable assets being reported in the balance sheet at their fairmarket value.B. accumulating cash for the replacement of the asset.C. an accurate measurement of the economic usefulness of an asset.D. spreading the cost of anasset over its useful life to the entity.Use thebelow present value tables for problems 5, 6 and 7 5. The present value of $3,000 to bereceived in 7 years at 10% is:A. $616.22B. $1,539.60C. $3,000.00D. $5,845.676. The present value of $3,000 to bereceived every year for 9 years, at 10%, is:A. $7,073.80B. $12,273.00C. $17,277.00D. $27,000.007. The present value of an obligation of$4,000 payable in 7 years at 8% is:A. $1,760B. $2,334C. $3,206D. $3,6808. A particular common stock has anannual cash dividend of $2.00 per share and is predicted to have a market valueof $30 per share 5 years from now. Assuming a discount rate of 10%, a fairmarket price for the stock today is:A. $20.00B. $26.21C. $37.58D. $56.21 9. Psyche Company wants to acquire TrimCompany. Trim’s ROI has been above average for its industry; net income hasaveraged $70,000 a year more than the industry average. These“excess” earnings are expected to continue at this amount for 5years. Assuming a discount rate of 8%, how much goodwill will arise fromPsyches’ purchase of Trim?A. $40,836B. $88,157C. $279,489D. $350,00010. Leasehold is an example of which ofthe following types of assets?A. Current asset.B. Property, plant and equipment.C. Goodwill.D. Intangible asset.11. The principal challenge tocalculating depletion is estimating:A. the cost of the asset.B. the salvage value of the exploration equipment.C. the demand for the product.D. the quantity of materialto be recovered.12. Long-lived, intangible assets such as leasehold improvements, patents,and copyrights are all subject to:A. depreciationB. amortizationC. depletionD. consolidation13. When a depreciable asset is sold:A. a gain arises if thesales proceeds exceed the net book value.B. a loss arises if the sales proceeds exceed the net book value.C. any cash received results in a gain.D. depreciation expense is adjusted so there is no gain or loss.14. Goodwill is an asset that arises because the present value of anacquired company’s estimated future earnings, discounted at the acquiringfirm’s ROI:A. is less than the fair market value of the net assets ofthe acquired company.B. is more thanthe fair market value of the net assets of the acquired company.C. is more than the fair market value of the net assets ofthe acquiring company.D. is less than the fair market value of the net assets ofthe acquiring company.15. The intangible asset “goodwill:”A. represents the management team’s assessment of its value to thecompany.B. may arise when onecompany purchases another company.C. arises because the market value of a company’s assets is greater thancost.D. all of the above are correct.16. Many current liabilities areaffected by accrual accounting entries. This happens because:A. liabilities are usually paid when they are incurred.B. accrual accountinginvolves recognizing liabilities before they are paid.C. the only way to reduce a liability account balance is with an adjustingentry.D. accrual accounting frequently involves recognizing liabilities beforethey are incurred.17. Which of the following is not usually associated withbonds?A. Coupon rate.B. Maturity value.C. Face amount.D. Maturity rate.18. An Accounts Payable could resultfrom which of the following transactions?A. Purchasing accounts for cash.B. Purchasing property, plant and equipment on credit.C. Purchasing goods andservices from suppliers on credit.D. All of the above.19. The current liability for WagesPayable (or Accrued Payroll) represents the:A. gross pay earned by employees for which they have not yet been paid.B. net pay earned byemployees for which they have not yet been paid.C. employer’s federal and state payroll tax obligation.D. employer’s liability for various with holdings taken out of the grosspay earned by employees.20. The financial leverage characteristic of long-term debt resultsin:A. a reduction of the risk that creditors will not be paid.B. a magnification of ROErelative to what it would be without long-term debt.C. a magnification of ROI relative to what it would be without long-termdebt.D. the deductibility, for income tax purposes, of dividends tostockholders.21. When a company issues a bond at a premium:A. the company is more profitable than most companies in its industry.B. investors perceive the bond to be a very safe investment.C. the investors’ interestincome will be less than the interest received each year.D. the investors’ interest income will be more than the interest receivedeach year.22. Which of the following is not sometimes associated withbonds?A. Debenture.B. Callable.C. Cumulative.D. Convertible 23. If the market price of a bondexceeds its face amount:A. the coupon rate is less than the market interest rate.B. the coupon rate is morethan the market interest rate.C. the company’s ROI and working capital have been increasing over time.D. the maturity rate has been declining.24. The market value of a bond is the sum of the present value of futureinterest payments and the present value of the amount to be repaid at maturity,discounted at:A. the market rate.B. the coupon rate.C. the dividend rate.D. the prime rate.25. Financial leverage refers to which of the following?A. The difference betweenthe rate of return earned on assets (ROI) and the rate of return earned onowners’ equity (ROE).B. The difference between the rate of return earned on current assets andthe rate of return earned on retained earnings.C. The leverage a firm obtains from increasing production.D. Decreasing fixed costs per unit by increasing production.26. When a company issues a bond at a discount:A. the company will pay less than the face amount of the bond at itsmaturity.B. the company will pay more than the face amount of the bond at itsmaturity.C. the company’s interest expense will be less than the interest paid eachyear.D. the company’s interestexpense will be more than the interest paid each year.27. When bonds are issued at a premium:A. interest expense on thebonds will be less than the interest paid.B. interest expense on the bonds will be more than the interest paid.C. the bonds are sold for less than their face amount.D. the coupon interest rate is less than the market interest rate.28. Which of the following is (are) atrue statement(s) pertaining to bonds?A. Bonds can be sold at a discount, par, or payable.B. Bonds can be sold at adiscount, par, or premium.C. The SEC sets the market price of a bond.D. The issuing firm sets the price of a bond.E. None of the above.29. Which of the following is true regarding bond discounts and/orpremiums?A. Bond discount is amortized but bond premium is not.B. Bond premium is amortized but bond discount is not.C. Neither bond discount nor premium is amortized.D. Both bond discount andpremium are amortized. 30. The amortization of bonddiscount:A. increases the cash paid to bondholders for interest.B. results in bond interestexpense being greater than the interest paid to bondholders.C. results in bond interest expense being less than the interest paid tobondholders.D. reduces the carrying value of bonds payable on the balance sheet.31. Factors that usually affect retained earnings directly include:A. net income or loss, anddividends.B. extraordinary items and losses from discontinued operations.C. stock dividends and gains or losses from the sale of treasury stock.D. net income or loss, and the issuance of stock at an amount in excess ofpar value.32. In comparison to the owners’ equity section of a corporation’s balancesheet, owners’ equity of a proprietorship or partnership:A. normally does not make a distinction between invested capital and retainedearnings.B. normally uses “Capital” accounts for each individual owner,rather than a “Retained Earnings” account for all of the owners.C. normally uses a “Drawings” account for each individual owner,rather than a “Dividends” account for all of the owners.D. all of the above.33. The declaration of a cash dividend by the directorsresults in:A. a decrease in cash and a decrease in retained earnings.B. a decrease in retainedearnings and an increase in current liabilities.C. a decrease in net income and a decrease in cash.D. a decrease in net income and an increase in current liabilities. 34. In most states, par value of issuedshares represents:A. Legal capital.B. No par capital.C. Noncontrolling capital.D. Corporate capital.35. The term preemptive right pertains to which of the following?A. The Board of Directors rights in liquidation.B. Present shareholdersright to purchase shares from any additional share issuances.C. Present shareholders right to purchase treasury shares when reissued.D. Preferred stockholders right to dividends.36. Balance sheet disclosures for preferred stock include all of thefollowing except:A. The number of shares issued.B. The number of shares outstanding.C. The liquidating or redemption value.D. The credit or marketvalue.E. The number of shares authorized. 37. The declaration date pertainsto:A. The date used to determine who receives dividends.B. The date on which the board of directors declares it’s going toliquidate the firm.C. The date on which theboard of directors declares a dividend.D. The date a dividend is paid.38. Fred Jones owns 56 shares of the Robust Corporation’s stock. Robustannounces a 3 for 2 stock split. How many shares will Fred have after thissplit?A. 178 shares.B. 112 shares.C. 84 shares.D. 56 shares.39. Braco has 40,000 shares of $100 parvalue common stock outstanding, and 10,000 shares in the treasury. The numberof additional shares that would be issued in a 5% stock dividend is:A. 500B. 1,000C. 1,500D. 2,00040. When a stock dividend is declared and issued:A. total paid-in capital does not change.B. total owners’ equitydoes not change.C. the balance in the retained earnings account is decreased by the parvalue of the shares issued in the dividend.D. total paid-in capital is decreased by the market value of the sharesissued in the dividend.41. When a company splits its common stock 3 for 1:A. total paid-in capital increases by a factor of 3.B. the balance in the retained earnings account is decreased by the marketvalue of the shares issued.C. the market value of thecompany’s stock falls by two-thirds.D. the shareholders are assured of receiving larger cash dividends. 42. The principal reason for a companyhaving a common stock split is to:A. increase the total cash dividends paid to stockholders.B. capitalize retained earnings.C. decrease total owners’ equity.D. decrease the marketvalue per share of common stock.43. When a firm purchases its own shares for the treasury:A. total owners’ equity isdecreased.B. total owners’ equity is increased.C. the balance in the retained earnings account is decreased.D. paid-in capital is decreased.44. If a firm sells treasury stock formore than its cost:A. a gain is recognized in the income statement.B. the balance in the retained earnings account is increased.C. additional paid-incapital is increased.D. total owners’ equity does not change.45. The statement of changes in retained earnings for the year shows:A. the retained earningsbalance at the beginning of the year.B. amounts received from the sale of additional common stock during theyear.C. extraordinary gains or losses during the year.D. the effect of a stock split during the year. “Is this question part of your assignment? We Can Help!”
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