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Chapter 6 1. What is merchandise inventory and what is the primary objective of inventory measurement? 2. What is the difference between goods flow and cost flow? USE THE INFORMATION BELOW TO ANSWER THE NEXT FOUR QUESTIONS. 3. Using the average cost method and rounding to the nearest dollar, the cost assigned to the ending inventory is? cost of goods sold is? 4. Using the last-in, first-out (UFO) method, the cost assigned to the ending inventory is? cost of goods sold is? 5. Using the first-in, first-out (FIFO) method, the cost assigned to the ending inventory is? cost of goods sold is? 6. Using the specific identification method and assuming that June 1 beginning inventory and June 25 purchases were left in ending inventory, the cost assigned to the ending inventory is? 7. Under which method of cost flow are a) the earliest costs assigned to inventory? b) the latest costs assigned to inventory? 8. In periods of rising prices which inventory method (UFO, FIFO or average) a) will give the highest net income? b) will give the lowest net income? c) is best suited for tax purposes? 9. Which method is best suited for the balance sheet? income statement? 10. Which method best follows the matching principle? 11. Which method, when used for income tax purposes, must also be used for financial purposes? Chapter 9 12. What are the characteristics of long-term assets? 13. What is included in the cost of land? Land improvements? Buildings? Equipment? 14. If land, buildings, and equipment are purchased for $200,000, the appraised values of the land, buildings, and equipment are $20,000,$80,000, and $60,000 respectively, the cost allocation for land, buildings, and equipment are ? 15. What is depreciation? What type of account is accumulated depreciation? What is residual value? What are other names for residual value? 16. How is the carrying or book value of an asset calculated? What is depreciable cost? USE THE FOLLOWING TO ANSWER THE NEXT THREE QUESTIONS. Jones Company purchased a machine on January 1,19x for $60,000. The machine has a useful life of four years or 20,000 units of production and an estimated residual value of $10,000. 17. The amount of depreciation to be recorded for each year using the straight-line method would be? What is the book value (carrying value) after the second year? 18. The amount of depreciation to be recorded for the first year using the double-declining-balance method would be? 19. The amount of depreciation to be recorded for the first year, using the units of production method and assuming that 4,000 units are produced, would be? 20. Know the difference between a capital expenditure and a revenue expenditure. Give examples of each. 21. Know the definition of the following: a. additions e. extraordinary repairs b. patent f. franchise c. ordinary repairs g. amortization i. betterment d. depletion h. copyright j. natural resources Chapter 7 USE THE FOLLOWING TO ANSWER THE NEXT THREE QUESTIONS. a. Established a petty cash fund for $200 b. Reimbursed the petty cash fund given the following disbursements: 1. payment for supplies, $60. 2. Freight-In, $55. 3. Purchases, $50. 4. Cash balance at the end of the period was $20. c. Increased the petty cash fund by $50. 22. What is the journal entry for part (a)? 23. What is the journal entry for part (b)? 24. What is the journal entry for part (c)? 25. Assume each of the following appeared on a bank reconciliation. Which of the following would be (1) an addition to balance per books, ( 2 ) deduction from balance per books, (3) addition to balance per bank, (4) deduction from balance per bank? a. outstanding checks b. deposits in transit c. bank service charge d. NSF check e. note collected by bank i. interest earned on our account balance 26. Know normal balances of accounts (debit or credit) 27. Know whether an account increases or decreases with a debit or credit 28. Know whether an account is an asset, liability, or equity Chapter 6 1. What is merchandise inventory and what is the primary objective of inventory measurement? 2. What is the difference between goods flow and cost flow? USE THE INFORMATION BELOW TO ANSWER THE NEXT FOUR QUESTIONS. 3. Using the average cost method and rounding to the nearest dollar, the cost assigned to the ending inventory is? cost of goods sold is? 4. Using the last-in, first-out (UFO) method, the cost assigned to the ending inventory is? cost of goods sold is? 5. Using the first-in, first-out (FIFO) method, the cost assigned to the ending inventory is? cost of goods sold is? 6. Using the specific identification method and assuming that June 1 beginning inventory and June 25 purchases were left in ending inventory, the cost assigned to the ending inventory is? 7. Under which method of cost flow are a) the earliest costs assigned to inventory? b) the latest costs assigned to inventory? 8. In periods of rising prices which inventory method (UFO, FIFO or average) a) will give the highest net income? b) will give the lowest net income? c) is best suited for tax purposes? 9. Which method is best suited for the balance sheet? income statement? 10. Which method best follows the matching principle? 11. Which method, when used for income tax purposes, must also be used for financial purposes? Chapter 9 12. What are the characteristics of long-term assets? 13. What is included in the cost of land? Land improvements? Buildings? Equipment? 14. If land, buildings, and equipment are purchased for $200,000, the appraised values of the land, buildings, and equipment are $20,000,$80,000, and $60,000 respectively, the cost allocation for land, buildings, and equipment are ? 15. What is depreciation? What type of account is accumulated depreciation? What is residual value? What are other names for residual value? 16. How is the carrying or book value of an asset calculated? What is depreciable cost? USE THE FOLLOWING TO ANSWER THE NEXT THREE QUESTIONS. Jones Company purchased a machine on January 1,19x for $60,000. The machine has a useful life of four years or 20,000 units of production and an estimated residual value of $10,000. 17. The amount of depreciation to be recorded for each year using the straight-line method would be? What is the book value (carrying value) after the second year? 18. The amount of depreciation to be recorded for the first year using the double-declining-balance method would be? 19. The amount of depreciation to be recorded for the first year, using the units of production method and assuming that 4,000 units are produced, would be? 20. Know the difference between a capital expenditure and a revenue expenditure. Give examples of each. 21. Know the definition of the following: a. additions e. extraordinary repairs b. patent f. franchise c. ordinary repairs g. amortization i. betterment d. depletion h. copyright j. natural resources Chapter 7 USE THE FOLLOWING TO ANSWER THE NEXT THREE QUESTIONS. a. Established a petty cash fund for $200 b. Reimbursed the petty cash fund given the following disbursements: 1. payment for supplies, $60. 2. Freight-In, $55. 3. Purchases, $50. 4. Cash balance at the end of the period was $20. c. Increased the petty cash fund by $50. 22. What is the journal entry for part (a)? 23. What is the journal entry for part (b)? 24. What is the journal entry for part (c)? 25. Assume each of the following appeared on a bank reconciliation. Which of the following would be (1) an addition to balance per books, ( 2 ) deduction from balance per books, (3) addition to balance per bank, (4) deduction from balance per bank? a. outstanding checks b. deposits in transit c. bank service charge d. NSF check e. note collected by bank i. interest earned on our account balance 26. Know normal balances of accounts (debit or credit) 27. Know whether an account increases or decreases with a debit or credit 28. Know whether an account is an asset, liability, or equity

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