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1. (TCO C) Which characteristic is not possessed by intangible assets? (Points: 5)

       MACROBUTTON HTMLDirect [pic] Physical existence.

       MACROBUTTON HTMLDirect [pic] Short-lived.

       MACROBUTTON HTMLDirect [pic] Result in future benefits.

       MACROBUTTON HTMLDirect [pic] Expensed over current and/or future years.

2. (TCO C) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be (Points: 5)

       MACROBUTTON HTMLDirect [pic] charged off in the current period.

       MACROBUTTON HTMLDirect [pic] amortized over the legal life of the purchased patent.

       MACROBUTTON HTMLDirect [pic] added to factory overhead and allocated to production of the purchaser's product.

       MACROBUTTON HTMLDirect [pic] amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product.

3. (TCO C) Intangible assets are reported on the balance sheet (Points: 5)

       MACROBUTTON HTMLDirect [pic] with an accumulated depreciation account.

       MACROBUTTON HTMLDirect [pic] in the property, plant, and equipment section.

       MACROBUTTON HTMLDirect [pic] separately from other assets.

       MACROBUTTON HTMLDirect [pic] none of the above.

4. (TCO D) Which of the following is true about accounts payable?

(1.) Accounts payable should not be reported at their present value.

(2.) When accounts payable are recorded at the net amount, a Purchase Discounts account will be used.

(3.) When accounts payable are recorded at the gross amount, a Purchase Discounts Lost account will be used. (Points: 5)

       MACROBUTTON HTMLDirect [pic] 1

       MACROBUTTON HTMLDirect [pic] 2

       MACROBUTTON HTMLDirect [pic] 3

       MACROBUTTON HTMLDirect [pic] Both 2 and 3 are true.

5. (TCO D) A contingency can be accrued when (Points: 5)

       MACROBUTTON HTMLDirect [pic] it is certain that funds are available to settle the disputed amount.

       MACROBUTTON HTMLDirect [pic] an asset may have been impaired.

       MACROBUTTON HTMLDirect [pic] the amount of the loss can be reasonably estimated, and it is probable that an asset has been impaired or a liability incurred.

       MACROBUTTON HTMLDirect [pic] it is probable that an asset has been impaired or a liability incurred, even though the amount of the loss cannot be reasonably estimated.

6. (TCO D) An electronics store is running a promotion in which, for every video game purchased, the customer receives a coupon upon checkout to purchase a second game at a 50% discount. The coupons expire in one year. The store normally recognizes a gross profit margin of 40% of the selling price on video games. How would the store account for a purchase using the discount coupon? (Points: 5)

       MACROBUTTON HTMLDirect [pic] The reduction in sales price attributed to the coupon is recognized as premium expense.

       MACROBUTTON HTMLDirect [pic] The difference between the cost of the video game and the cash received is recognized as premium expense.

       MACROBUTTON HTMLDirect [pic] Premium expense is not recognized.

       MACROBUTTON HTMLDirect [pic] The difference between the cost of the video game and the selling price prior to the coupon is recognized as premium expense.

7. (TCO D) An example of an item which is not a liability is (Points: 5)

       MACROBUTTON HTMLDirect [pic] dividends payable in stock.

       MACROBUTTON HTMLDirect [pic] advances from customers on contracts.

       MACROBUTTON HTMLDirect [pic] accrued estimated warranty costs.

       MACROBUTTON HTMLDirect [pic] the portion of long-term debt due within one year.

8. (TCO D) On January 1, 2010, Huff Co. sold $1,000,000 of its 10% bonds for $885,296 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Huff report as interest expense for the six months ended June 30, 2010? (Points: 5)

       MACROBUTTON HTMLDirect [pic] $44,266

       MACROBUTTON HTMLDirect [pic] $50,000

       MACROBUTTON HTMLDirect [pic] $53,118

       MACROBUTTON HTMLDirect [pic] $60,000

$885,296 × .06 = $53,118

9. (TCO E) Stockholders' equity is generally classified into two major categories: (Points: 5)

       MACROBUTTON HTMLDirect [pic] contributed capital and appropriated capital.

       MACROBUTTON HTMLDirect [pic] appropriated capital and retained earnings.

       MACROBUTTON HTMLDirect [pic] retained earnings and unappropriated capital.

       MACROBUTTON HTMLDirect [pic] earned capital and contributed capital.

10. (TCO F) A mining company declared a liquidating dividend. The journal entry to record the declaration must include a debit to (Points: 5)

       MACROBUTTON HTMLDirect [pic] Retained Earnings.

       MACROBUTTON HTMLDirect [pic] a paid-in capital account.

       MACROBUTTON HTMLDirect [pic] Accumulated Depletion.

       MACROBUTTON HTMLDirect [pic] Accumulated Depreciation.

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