Connect Acct 211 Quiz 4 (Spring 2014) with 100% Correct Answers

Acct 211
Assignment: Quiz 4
2014 Spring D- LearnSmart 31

1.

A patent:

Gives its owner the exclusive right to publish and sell a
musical or literary work during the life of the creator plus 70 years.

Gives its owner an exclusive right to manufacture and sell a
patented item or to use a process for 20 years.

Gives its owner an exclusive right to manufacture and sell a
device or to use a process for 50 years.

Is the amount by which the value of a company exceeds the
fair market value of a company’s net assets if purchased separately.

Gives its owner the exclusive right to publish and sell a
musical or literary work during the life of the creator plus 17 years.
2.

A total asset turnover ratio of 3.5 indicates that:

For every $1 in sales, the firm acquired $3.50 in assets
during the period.

For every $1 in assets, the firm produced $3.50 in net sales
during the period.

For every $1 in assets, the firm earned gross profit of
$3.50 during the period.

For every $1 in assets, the firm earned $3.50 in net income.

For every $1 in assets, the firm paid $3.50 in expenses
during the period.
3.

Total asset turnover is used to evaluate:

The efficiency of management’s use of assets to generate
sales.

The necessity for asset replacement.

The number of times operating assets were sold during the
year.

The cash flows used to acquire assets.

The relation between asset cost and book value.
4.

The formula for computing annual straight-line depreciation
is:

Depreciable cost divided by useful life in units.

Cost plus salvage value divided by the useful life in years.

Cost less salvage value divided by the useful life in years.

Cost multiplied by useful life in years.

Cost divided by useful life in units.
5.

Depreciation:

Measures the decline in market value of an asset.

Measures physical deterioration of an asset.

Is the process of allocating to expense the cost of a plant
asset.

Is an outflow of cash from the use of a plant asset.

Is applied to land.
6.

Natural resources:

Include standing timber, mineral deposits, and oil and gas
fields.

Are also called wasting assets.

Are long-term assets.

Are depleted.

All of the choices are correct.
7.

An asset can be disposed of by:

Discarding it.

Selling it.

Exchanging it for another asset.

Donating it to charity.

All of these are possible ways to dispose an asset.
8.

A copyright:

Gives its owner the exclusive right to publish and sell a
musical or literary work during the life of the creator plus 70 years.

Gives its owner an exclusive right to manufacture and sell a
patented item or to use a process for 20 years.

Gives its owner an exclusive right to manufacture and sell a
device or to use a process for 50 years.

Is the amount by which the value of a company exceeds the
fair market value of a company’s net assets if purchased separately.

Gives its owner the exclusive right to publish and sell a
musical or literary work during the life of the creator plus 20 years.
9.

A depreciation method in which a plant asset’s depreciation
expense for a period is determined by applying a constant depreciation rate to
the asset’s beginning-of-period book value is called:

Book value depreciation.

Declining-balance depreciation.

Straight-line depreciation.

Units-of-production depreciation.

Modified accelerated cost recovery system (MACRS)
depreciation.
10.

Goodwill:

Is not amortized, but is tested annually for impairment.

Is amortized using the straight-line method.

Is amortized using the units-of-production method.

May be amortized using either the straight-line or
units-of-production method.

Is never amortized or tested for impairment.
11.

Disadvantages of a partnership include:

Limited life.

Mutual agency.

Unlimited liability.

Co-ownership of property.

All of the choices are disadvantages.
12.

A partnership agreement:

Is not binding unless it is in writing.

Is the same as a limited liability partnership.

Is binding even if it is not in writing.

Does not generally address the issue of the rights and
duties of the partners.

Is also called the articles of incorporation.
13.

When a partnership is liquidated:

Noncash assets are converted to cash.

Any gain or loss on liquidation is allocated to the
partners’ capital accounts using the income and loss sharing ratio.

Liabilities are paid or settled.

Any remaining cash is distributed to the partners based on
their capital balances.

All of the choices are correct.
14.

A partnership designed to protect innocent partners from
malpractice or negligence claims resulting from acts of another partner is a:

Partnership.

Limited partnership.
?
Limited liability partnership.

General partnership.

Limited liability company.
15.

Mutual agency implies that each partner in a partnership is
a fully authorized agent of the partnership. Which of the following statements
is correct regarding the authority of a partner to bind the partnership in
dealings with third parties?

The partner’s authority must be derived from the partnership
agreement.

The partner’s authority may be effectively limited by a
formal resolution of the other partners, even if third parties are not aware of
that limitation.

Only a partner with a majority interest in a partnership has
the authority to represent the partnership to third parties.

A partner has authority to deal with third parties on the
behalf of the other partners only if he has written permission to do so.

A partner may be able to legally bind the partnership to
actions even if the other partners are unaware of his actions.
16.

The withdrawals account of each partner is:
?
Closed to that partner’s capital account with a credit.

Closed to that partner’s capital account with a debit.

A permanent account that is not closed.

Credited with that partner’s share of net income.

Debited with that partner’s share of net loss.
17.

Mutual agency means

Creditors can apply their claims to partners’ personal
assets.

Partners are taxed on partnership withdrawals.

All partners must agree before the partnership can act.

The partnership has a limited life.

A partner can commit or bind the partnership in any contract
within the scope of the partnership business.
18.

In a partnership agreement, if the partners agreed to an
interest allowance of 10% annually on each partner’s investment, the interest
allowance:

Is ignored when earnings are not sufficient to pay interest.

Can make up for unequal capital contributions.

Is an expense of the business.

Must be paid because the partnership contract has unlimited
life.

Legally becomes a liability of the general partner.
19.

A capital deficiency means that:

The partnership has a loss.

The partnership has more liabilities than assets.

At least one partner has a debit balance in his/her capital
account.

At least one partner has a credit balance in his/her capital
account.

The partnership has been sold at a loss.
20.

A partner can withdraw from a partnership by:

Selling his/her interest to another person for cash.

Selling his/her interest to another person in exchange for
assets.

Receiving cash from the partnership in the amount of his/her
interest.

Receiving assets from the partnership in the amount of
his/her interest.

All of the options are correct.
21.

The times interest earned computation is:

(Net income + Interest expense + Income taxes)/Interest
expense.

(Net income + Interest expense – Income taxes)/Interest
expense.

(Net income – Interest expense – Income taxes)/Interest
expense.

(Net income – Interest expense + Income taxes)/Interest
expense.

Interest expense/(Net income + Interest expense + Income
taxes expense).
22.

If a company uses a special payroll bank account:

The company does not need to issue paychecks.

The company draws one check for the entire payroll on the
regular bank account and deposits it in the payroll bank account.

The company must use a federal depository bank for the
payroll bank account.

There is no need for a payroll register.

There is no need to issue W-2’s.
23.

The amount of federal income taxes withheld from an
employee’s paycheck is determined by:

The amount of the employee’s current earnings for the pay
period and number of withholding allowances the employee claims.

The employer’s merit rating.

The amount of social security taxes.

Multiplying the gross pay by 6.2%.

All of the choices are correct.
24.

Maryland Company offers a bonus plan to its employees equal
to 3% of net income. Maryland’s net income is expected to be $960,000. The
amount of the employee bonus expense is estimated to be:

$27,961

$28,800

$29,000

$29,691

$30,000

25.

All of the following statements regarding long-term
liabilities are true except?

Liabilities not expected to be paid within the longer of one
year or the company’s operating cycle are reported as long-term liabilities.

Long-term liabilities include long-term notes payable,
warranty liabilities, lease liabilities, and bonds payable.

Liabilities that do not have a fixed due date, but are
payable on demand, are reported as long-term liabilities.

Long-term liabilities can be reported on the balance sheet
in a single total or in multiple categories.

A single long-term liability can be divided between current
and noncurrent sections on the balance sheet.
26.

Recording employee payroll deductions may involve:

Liabilities to individual employees.

Liabilities to federal and state governments.

Liabilities to insurance companies.

Liabilities to labor unions.

All of the choices are correct.
27.

An employer’s federal unemployment taxes (FUTA) are
reported:

Annually.

Semiannually.

Quarterly.

Monthly.

Weekly.
28.

Employers’ responsibilities for payroll include:

Providing each employee with an annual report of his or her
wages subject to FICA and federal income taxes along with the amount of these
taxes withheld.

Filing Form 941, the Employer’s Quarterly Federal Tax
Return.

Filing Form 940, the Annual Federal Unemployment Tax Return.

Maintaining individual earnings records for each employee.

All of the choices are correct.
29.

Harvel Company is required by law to collect and remit sales
taxes to the state. If Havel has $8,000 of cash sales that are subject to an 8%
sales tax, what is the journal entry to record the cash sales?

Debit Cash $8,000; credit Sales $7,360; credit Sales Taxes
Payable $640.

Debit Sales Taxes Payable $640; debit Cash $7,360; credit
Sales $8,000.

Debit Cash $8,000; credit Sales $8,000; and record the taxes
when paid.

Debit Cash $8,640; credit Sales $8,000; credit Sales Taxes
Payable $640.

Debit Accounts Receivable $8,640; credit Sales $8,000;
credit Sales Taxes Payable $640.
Sales Taxes Payable = Sales * Sales Tax Rate
Sales Taxes Payable = $8,000 * 0.08 = $640 (Credit to Sales
Taxes Payable)
Cash Received = Sales + Sales Taxes Payable
Cash Received = $8,000 + $640 = $8,640 (Debit to Cash)
30.

A payroll register includes:

Pay period dates.

Hours worked.

Gross pay and net pay.

Deductions.

All of the choices are correct.