8/11/26, 11:56 AM ACCT 3110 Entrance Exam Flashcards | Quizlet
In a period of rising prices
Gross profit under FIFO will be higher than under LIFO
During a period of rising prices, the inventory method that will yield the highest net
income and asset value is
FIFO
Beginning inventory is $110,000, purchases $200,000, and sales total $410,000. The
normal gross profit is 25%. Using the gross profit method, how much is ending
inventory?
$2500
Why would a business select an acceleration method of depreciation for tax
purposes?
Accelerated depreciation generates higher depreciation expense immediately, and
therefore lowers tax payments in the early years of the asset's life
During a period of rising prices, the inventory method that will yield the highest net
income and asset value is
FIFO
Harrison Company purchased a machine for $10,800 on Jan 1, 2016. The machine has
been depreciated using the straight-line method assuming it has a four-year life with
a $600 residual value. Harrison sold the machine on Jan 1, 2018 for $8,000. The book
value as of Dec 31, 2017 is $5,700. What gain or loss should Harrison record on the
sale?
Gain, $2,300
The purchase of new equipment with cash would appear on the statement of cash
flows asa/an
Investing cash flow
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, 8/11/26, 11:56 AM ACCT 3110 Entrance Exam Flashcards | Quizlet
Nicholas Corporation accrues the interest expense on a short term note payable at
the end of its fiscal year. Due to this transaction
Current liabilities will increase and stockholder's equity will decrease
Phoebe Corporation signed a 6-month note payable on Oct 23, 2018. What accounts
relating to the note payable will be reported on its financial statements for the fiscal
year ending Dec 31, 2018?
Notes payable, interest payable, and interest expense will be reported on the
balance sheet
Failure to accrue interest expense results in
An overstatement of net income and an understatement of liabilities
Jackson Bank lends Jabbour Clothing Company $
125,000 on September 1. Jabbour
signs a $
125,000, 6%, six-month note. The journal entry made by Jabbour on
December31, its fiscalyear-end, is
Debit Interest Expense and credit interest payable for $2,500
Gravel Corporation borrowed $250,000 from a bank on January1, 2019, by signing a
10%, six-month note. The journal entry made by Gravel on January1, 2019, will debit
Cash for $250,000 and credit notes payable for $250,000
If a corporation issues 3,200 shares of $1.50 par value common stock for $38,400, the
journal entry would include a credit to
Common stock for $4,800
A corporation has 10,000 shares of 10% preferred stock outstanding. Also, there are
10,000 shares of common stock outstanding. Par value for each is $100. If a $850,000
dividend is paid, how much goes to the preferred stockholders?
$100,000
https://quizlet.com/909955040/acct-3110-entrance-exam-flash-cards/ 4/12
In a period of rising prices
Gross profit under FIFO will be higher than under LIFO
During a period of rising prices, the inventory method that will yield the highest net
income and asset value is
FIFO
Beginning inventory is $110,000, purchases $200,000, and sales total $410,000. The
normal gross profit is 25%. Using the gross profit method, how much is ending
inventory?
$2500
Why would a business select an acceleration method of depreciation for tax
purposes?
Accelerated depreciation generates higher depreciation expense immediately, and
therefore lowers tax payments in the early years of the asset's life
During a period of rising prices, the inventory method that will yield the highest net
income and asset value is
FIFO
Harrison Company purchased a machine for $10,800 on Jan 1, 2016. The machine has
been depreciated using the straight-line method assuming it has a four-year life with
a $600 residual value. Harrison sold the machine on Jan 1, 2018 for $8,000. The book
value as of Dec 31, 2017 is $5,700. What gain or loss should Harrison record on the
sale?
Gain, $2,300
The purchase of new equipment with cash would appear on the statement of cash
flows asa/an
Investing cash flow
https://quizlet.com/909955040/acct-3110-entrance-exam-flash-cards/ 3/12
, 8/11/26, 11:56 AM ACCT 3110 Entrance Exam Flashcards | Quizlet
Nicholas Corporation accrues the interest expense on a short term note payable at
the end of its fiscal year. Due to this transaction
Current liabilities will increase and stockholder's equity will decrease
Phoebe Corporation signed a 6-month note payable on Oct 23, 2018. What accounts
relating to the note payable will be reported on its financial statements for the fiscal
year ending Dec 31, 2018?
Notes payable, interest payable, and interest expense will be reported on the
balance sheet
Failure to accrue interest expense results in
An overstatement of net income and an understatement of liabilities
Jackson Bank lends Jabbour Clothing Company $
125,000 on September 1. Jabbour
signs a $
125,000, 6%, six-month note. The journal entry made by Jabbour on
December31, its fiscalyear-end, is
Debit Interest Expense and credit interest payable for $2,500
Gravel Corporation borrowed $250,000 from a bank on January1, 2019, by signing a
10%, six-month note. The journal entry made by Gravel on January1, 2019, will debit
Cash for $250,000 and credit notes payable for $250,000
If a corporation issues 3,200 shares of $1.50 par value common stock for $38,400, the
journal entry would include a credit to
Common stock for $4,800
A corporation has 10,000 shares of 10% preferred stock outstanding. Also, there are
10,000 shares of common stock outstanding. Par value for each is $100. If a $850,000
dividend is paid, how much goes to the preferred stockholders?
$100,000
https://quizlet.com/909955040/acct-3110-entrance-exam-flash-cards/ 4/12
