Book value is:

A. Cost plus accumulated depreciation

B. Cost minus accumulated depreciation

C. Cost divided by accumulated depreciation

D. Cost times accumulated depreciation

E. None of these

B. Cost minus accumulated depreciation

A truck costs $16,000 with a residual value of $1,000. It has an estimated useful life of five years. If the
truck was bought on July 3, what would be the book value at the end of year 1 using straight-line rate?

A. $16,000

B. $12,500

C. $14,500

D. $1,500

E. None of these

C. $14,500

1/40

Original

Book value is:

A. Cost plus accumulated depreciation

B. Cost minus accumulated depreciation

C. Cost divided by accumulated depreciation

D. Cost times accumulated depreciation

E. None of these

B. Cost minus accumulated depreciation

A truck costs $16,000 with a residual value of $1,000. It has an estimated useful life of five years. If the
truck was bought on July 3, what would be the book value at the end of year 1 using straight-line rate?

A. $16,000

B. $12,500

C. $14,500

D. $1,500

E. None of these

C. $14,500

A truck costs $9,200 with a residual value of $1,000. It is estimated that the useful life of the truck is four
years. The amount of depreciation expense in year 2 using the declining-balance method at twice the
straight-line rate is:

A. $2,300

B. $4,600

C. $3,200

D. $6,400

E. None of these

A. $2,300

Using the straight-line method, what is the depreciation expense for a computer that cost $4,500, has a
residual value of $700, and has a life of four years?

A. $1,125

B. $950

C. $1,300

D. $1,950

E. None of these

B. $950
What is the depreciation expense for the first year straight-line method using the following?

Cost of car / $26,000

Residual value / $6,000

Life / 5 years

A. $4,400

B. $5,200

C. $4,000

D. $6,000

E. None of these

C. $4,000

What is the depreciation expense for the second year (straight-line method) using the following?

Cost of equipment / $14,000

Residual value / $500

Life / 4 years

A. $14,500

B. $13,500

C. $3,375

D. $3,275

E. None of these

C. $3,375

Which one of the following does not depreciate?

A. Building

B. Land

C. Truck

D. Computer

E. None of these

B. Land

A new truck costing $60,000 with a residual value of $6,000 has an estimated useful life of five years.
Using the declining-balance method at twice the straight-line rate, the depreciation expense in year 2 is:

A. $24,000

B. $14,000

C. $14,400

D. $2,400

E. None of these

C. $14,400

A new truck costing $50,000 with a residual value of $4,000 has an estimated useful life of five years.
Using the declining-balance method at twice the straight-line rate, the depreciation expense in year 2 is:

A. $20,000

B. $12,000

C. $18,000

D. $7,200

E. None of these

B. $12,000

A truck costs $35,000 with a residual value of $2,000. Its service life is five years. Using the declining-
balance method at twice the straight-line rate, the book value at the end of year 2 is:
A. $35,000

B. $22,000

C. $12,600

D. $33,000

E. None of these

C. $12,600

A new piece of equipment costs $18,000 with a residual value of $600 and an estimated useful life of
five years. Assuming twice the straight-line rate, the book value at the end of year 2 using the declining-
balance method is:

A. $7,200

B. $6,480

C. $11,520

D. $18,000

E. None of these

B. $6,480

Roche Biotech provides company cars for its salespeople that cost an average of $25,000. Using the class
recovery system of five years, what is the depreciation expense in year 2 of the MACRS?

A. $8,000

B. $25,000

C. $17,000

D. $5,000

E. None of these

A. $8,000

A truck costs $8,000 with a residual value of $1,000. The truck is expected to have a useful life of 70,000
miles. Assuming the truck is driven 15,000 miles the first year, the depreciation expense would be:
A. $1,714

B. $1,500

C. $1,174

D. $1,505

E. None of these

B. $1,500

If a car is depreciated in four years, the rate of depreciation using twice the straight-line rate is:

A. 25%

B. 50%

C. 100%

D. 75%

E. None of these

B. 50%

Federal Express bought material handling equipment for its hub operations that cost $180,000. Using
the MACRS, what is the depreciation expense in year 3 (using a five-year class)?

A. $15,360

B. $40,000

C. $43,560

D. $34,560

E. None of these

D. $34,560

Crestwood Paint Supply had a beginning inventory of 10 cans of paint at $25.00 per can. They purchased
20 cans during the month at $30.00 per can. They had an ending inventory valued at $500. How much
paint in dollars was used for the month?
A. $250

B. $850

C. $350

D. $1,350

E. None of these

C. $350

Allison Co. has a beginning inventory costing $90,000 and an ending inventory costing $120,000. Sales
were $380,000. Assume Allison's markup rate is 40%. Based on the selling price, the inventory turnover
at cost (to the nearest hundredth) is:

A. 2.17

B. 2.22

C. 1.47

D. 1.58

E. None of these

A. 2.17

Melissa's Dress Shop's inventory at cost on January 1 was $19,400. Its retail value was $36,000. During
the year, additional net purchases at a cost of $42,600 were brought in. Its retail value was $64,000. The
net sales for the year were $70,000. Melissa's inventory at cost by the retail method is:

A. $30,000

B. $18,600

C. $18,000

D. $12,400

E. None of these

B. $18,600
Finney's MMA Gym had a total of $1,300 worth of boxing gloves on June 1. The ending inventory for the
month was $524. What was the cost of goods sold for June?

A. $524

B. $1,352

C. $1,824

D. $776

E. None of these

D. $776

Clay's Fishing Shop's beginning inventory is $70,000 and ending inventory is $36,500. What was Clay's
average inventory?

A. $53,250

B. $48,000

C. $35,000

D. $18,250

E. None of these

A. $53,250

Moss Co. uses the FIFO method to calculate ending inventory. Assuming 300 units are not sold, the cost
of goods sold is:

Jan 1 / Inventory / 200 units at $9 = $1,800

Feb 15 / Purchase / 300 units at $10 = $3,000

Aug 20 / Purchase / 400 units at $11 = $4,400

Dec 20 / Purchase / 100 units at $12 = $1,200

A. $7,600

B. $7,280
C. $3,120

D. $3,400

E. None of these

E. None of these (7000)

Given the following:

LIFO method 250 units left in inventory

Beginning inventory / 200 units at $6 / $1,200

Purchases:

Apr. 10 / 400 units at $7 / $2,800

May 15 / 250 units at $7 / $1,750

July 9 / 200 units at $8 / $1,600

Oct. 8 / 100 units at $11 / $1,100

The cost of ending inventory is:

Totals for each date should include dollars signs in the third column.

A. $1,550

B. $2,300

C. $1,200

D. $3,200

E. None of these

A. $1,550

Given the following:

FIFO method: 16 units left in inventory

Jan. 1 / Beginning Inventory / 9 units at $105 = $945

Apr. 13 / Purchased / 14 units at $120 = $1,680

Sep. 17 / Purchased / 20 units at $130 = $2,600

Dec. 10 / Purchased / 14 units at $140 = $1,960

The cost of goods sold is:

A. $5,000

B. $10,000

C. $4,965

D. $5,225

E. None of these

C. $4,965

Belle Co. has beginning inventory of 12 sets of paints at a cost of $1.50 each. During the year, the store
purchased 7 at $3.00, 8 at $3.25, and 12 at $3.50. By the end of the year 31 sets were sold. Using the
LIFO method, the cost of ending inventory is:

A. $28.00

B. $12.00

C. $21.00

D. $3.50

E. None of these

B. $12.00

Mac's Hardware's gross profit on sales is 40%. At the beginning of January, cost of inventory was
$18,000. During one month, Mac had net purchases of $42,000. Net sales at retail for the month were
$49,000. The estimated cost of ending inventory using the gross profit method is:

A. $30,600

B. $29,400

C. $60,000
D. $42,000

E. None of these

A. $30,600

FIFO assumes all but one of the following:

A. Sell the old inventory first

B. Recent cost assigned to inventory not sold

C. Sell the new inventory first

D. Cost flow tends to follow physical flow

E. None of these

C. Sell the new inventory first

Joy Co. allocates overhead expenses to all departments on the basis of floor space (sq. ft.) occupied by
each department. This year total overhead expenses were $22,000. Department A. occupied 15,000 sq.
ft., Department B. 18,000 sq. ft., and Department C. 9,000 sq. ft. The amount of overhead allocated to
Department B is (round to the nearest dollar):

A. $1,800

B. $9,429

C. $9,900

D. $39,600

E. None of these

B. $9,429

The home of Russell Slater is assessed at $140,000. The tax rate is 11.8 mills. The actual amount of tax
on Russell's home is:

A. $1,562

B. $1,652
C. $1,462

D. $1,362

E. None of these

B. $1,652

Judy Ring purchased a watch with a retail price of $8,000. She would still have to pay a sales tax of 6%
and an excise tax of 10%. Since the jeweler would be shipping this, there would be an additional $20
shipping charge. The total purchase price of this watch for Judy is:

A. $8,880

B. $8,936

C. $8,516

D. $8,496

E. None of these

E. None of these

Given a tax rate of $.0824 and an assessed valuation of $74,900, the total property tax due is:

A. $6,111.67

B. $6,110.67

C. $6,071.67

D. $6,171.76

E. None of these

D. $6,171.76

The tax rate of $.6943 in decimal can be expressed per $100 as:

A. $6.943

B. $69.43
C. $690.3

D. $69.43 mills

E. None of these

B. $69.43

Best Buy has a warehouse with a market value of $5,000,000. The property in Best Buy's area is assessed
at 40% of the commercial value. The tax rate is $105.10 per $1,000 assessed value. What does Best Buy
pay in property tax?

A. $200,000

B. $210,200

C. $250,000

D. $110,000

E. None of these

B. $210,200

Bill Jones bought a fishing rod that sells for $70 subject to a 6% sales tax and an excise tax of 10%. The
total amount Bill paid for the rod is:

A. $77.00

B. $74.20

C. $81.20

D. $75.00

E. None of these

C. $81.20

The building of Jim's Hardware is assessed at $109,000. The tax rate is $86.95 per $1,000 of assessed
valuation. The tax due is:

A. $9,477.55
B. $947.75

C. $8,695.45

D. $8,659.54

E. None of these

A. $9,477.55

Jack Matthew bought a new diamond ring for $20,000. Sales tax is 5% with a 10% excise tax. The total
price including taxes that Jack paid is:

A. $20,000

B. $19,000

C. $21,000

D. $22,000

E. None of these

E. None of these

The tax rate per dollar in a town can be calculated by dividing the total assessed value into:

A. Mills

B. Budget needed

C. Market value

D. Appraised value

E. None of these

B. Budget needed

Kris bought a new fur coat for $8,000. She must pay 5% sales tax and 7% excise tax. The furrier is
shipping the coat, so Kris must also pay a $15.00 insurance charge. What is the total purchase price of
the coat?

A. $8,960
B. $8,400

C. $8,975

D. $8,560

E. None of these

C. $8,975

Mike's condo has a market value of $310,000. The property in Mike's area is assessed at 40% of the
market value. The tax rate is $145.10 per $1,000 of assessed valuation. The tax for Mike is:

A. $16,992.40

B. $7,999.30

C. $7,999.40

D. $17,992.40

E. None of these

D. $17,992.40

Total sales of $400,000 that included a 6% sales tax yields actual sales of:

A. $42,800

B. $37,537.58

C. $377,358.49

D. $48,200

E. None of these

C. $377,358.49

Becky bought a new Apple computer for $1,205. The purchase price included a 6% sales tax. What is the
actual selling price of the computer?

A. $1,132.08
B. $1,277.30

C. $1,200.00

D. $1,136.79

E. None of these

D. $1,136.79

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