Cost includes all expenditures that are necessary in order to acquire the asset and make it ready for its intended use, including the wages of employees who get the asset ready for its intended use.

Legal costs incurred to purchase a building are not included as part of the cost of the building.

The carrying amount of an asset equals its costless accumulated depreciation.

Under the double diminishing-balance method of depreciation, an asset may not be depreciated below its estimated residual value.

Ordinary repairs are capital expenditures that should be depreciated over the useful life of the asset.

The cost of an addition is debited to the appropriate asset account.

When the proceeds exceed the carrying amount of a piece of equipment being sold, the excess is debited to Loss on Disposal.

When the units-of-production method is used to calculate the depreciation of an asset, adjustments to depreciation expense are not required for partial years.

Under IFRS, only intangible assets with indefinite lives are amortized.                 

Asset turnover is calculated by dividing average total assets by net sales.

The cost of a factory machine includes all of the following costs except

On January 1, Year 1, a machine with a useful life of five years and a residual value of $1,000 was purchased for $20,000.What is the depreciation expense in Year 2 under the double diminishing-balance method?

On June 1, Year 1, a machine costing $45,000 was acquired. The machine is expected to produce 90,000 units over a five-year period, after which it will be scrapped. The machine produced 20,000 units during its first full year of use.  The company’s fiscal year end is December 31. Which statement is true?

An asset that cost $20,000 and has accumulated depreciation of $15,000 is sold for $2,000. The journal entry would include a

The exclusive right to manufacture, sell, or otherwise control an invention is called a

Receivables are classified as accounts receivable, notes receivable, or other receivables

The carrying amount of receivables is calculated by subtracting the Allowance for Doubtful Accounts from Accounts Receivable.

An opening debit balance in the Allowance for Doubtful Accounts indicates that bad debt expense for the previous period was under-estimated.

An aging schedule shows a required balance in the Allowance for Doubtful Accounts of $9,600. If there is a credit balance in the allowance account of $2,500 prior to adjustment, the adjustment amount is $7,100.

The percentage of sales approach is the most common method used by companies in estimating uncollectible accounts.

The interest due at the maturity of a two-month, 10%, $600 note is calculated by multiplying $600 × 10% × 2/12.

The amount of cash collected at maturity on a $4,000 note is $4,200. If $120of the interest has been accrued prior to maturity, the entry to record the honouring of the note at maturity should include a credit to Interest Revenue for $80.

The principal amount of a 7% note receivable is $500,000. The note is dated January 1, 2023 and is due January 1, 2026.  The interest revenue to be recognized on December 31, 2023, the company’s, fiscal year end, is $105,000.

Short-term receivables are reported on the balance sheet immediately following cash and short-term investments.

The higher the receivables turnover, the less liquid are the company’s receivables.

When a firm writes off a bad debt under the allowance method of accounting for bad debts,

A company has a balance in Accounts Receivable of $600,000 at the end of the year and it estimates that uncollectible accounts will be 2%of accounts receivable. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of

Under the allowance method, the entry to write off an uncollectible account results in a debit to

When an interest-bearing note is dishonoured at maturity and ultimate collection of the principal and interest is expected, the entry for the dishonouring, assuming no previous accrual of interest, should include

Assume credit sales are normally sold on terms of n/30. Net credit sales total $50,000 and average gross accounts receivable total $5,000 in the current period. The collection period is

Journal entries are prepared for items affecting the bank balance of a bank reconciliation.

When one individual is responsible for all of the related activities, the potential for errors and

fraud is increased.

Independent reviews should occur periodically and should be done by someone who is independent of the employee responsible for the information.

A bank debit memorandum increases the bank balance.

At the end of an accounting period, a debit balance of $99 in Cash Over and Short would be reported in the income statement as Miscellaneous Revenue.

Companies that have a lot of cash payments often use a special journal, called a cash payments journal, to record all payments of cash.

Cash proceeds collected by the bank for a depositor would be identified in the bank statement by a credit memorandum to explain the entry.

An outstanding cheque that was also outstanding the previous month should not be included in the reconciliation of the bank statement this month.

A postage expense of $4.75 is paid out of petty cash. The entry to record the transaction would reduce the balance of the Petty Cash account by that amount.

EFT transactions have resulted in better internal control.

Each of the following is a control activity except:

A company issues a cheque for $75 but records it incorrectly as $57. On the bank reconciliation, the $18 error should be

Bourque Company has the following assets at the balance sheet date:

           Cashin bank–savings account......................              $5,000

           Amountsdue from customers.......................              14,000

           Post-datedcheques.....................................                 4,000

           Chequingaccount balance...........................              10,000

Which amount should be reported as cash on the balance sheet?

A $100 petty cash fund has cash of $21 and valid receipts for $80. The journal entry upon replenishment would include a

Which of the following is not a limitation of internal control?

An important purpose of closing entries is to set permanent account balances to zero in order to begin the next period.

Adjustments are journalized and posted only at the end of an accounting period, whereas correcting entries are journalized and posted whenever an error is discovered.

Current assets are cash and other assets that are converted to cash, sold or used, but not within the coming year.

Non-current liabilities such as bank notes payable, mortgages payable, and bonds payable are expected to be paid from existing current assets.

The Drawings account is closed to the Income Summary account.

The relationship between current assets and current liabilities is important in evaluating a company’s liquidity.

A work sheet makes it easier to prepare interim (e.g. monthly or quarterly) financial information.

Under IFRS, the balance sheet may be called the statement of financial position.

The acid-test ratio is a test of the company’s immediate liquidity.

Unearned revenue is an example of a revenue.

The work sheet is a type of

The proper sequence for the accounting cycle is

The closing entry for the drawings accounts will require

The post-closing trial balance will

If current assets are $1,500 and current liabilities are $1,000, the working capital is