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An asset being depreciated with the straight-line method has a residual value of $10,000 and accumulated depreciation of $30,000 in its second year. What was the original cost of the asset if its useful life was 5 years?

a $160,000

b$140,000

c $85,000

d $75,000

When the board declares dividends, the correct journal will be

a Dividends Expense Dividends Payable

b Dividend Declared Cash

c Dividends Declared Dividends Payable

d Dividends Receivable Dividends Revenue

Dividends Payable is the most common type of liability the corporation has to

a the government.

b the employees.

c the shareholders.

d the board of directors.

When applying the lower of cost and net realizable value, the following is true:

a The inventory account remains at its original value.

b A contra account to inventory is used.

c COGS rises when ending inventory is reduced to net realizable value.

d Lower of cost and net realizable value can only be applied to individual items.

Rubys & Rings Inc. offers a two-year assurance warranty against failure of its products. The estimated liability is 4% of sales in the year of sale and 6% in the second year. Sales for 2020 and 2021 were: $2,500,000 and $2,800,000, respectively. The company incurred no warranty costs in 2020 but in 2021 they spent $175,000 on repairs related to the warranties issued 2020 and 2021. The warranty expense for 2020 was

a $80,000.

b $100,000.

c $150,000.

d $250,000.

Depreciation Expense

a applies to all non-current assets.

b cannot be used for calculating income taxes.

c is acceptable for use under GAAP and the Income Tax Act.

d is very similar to CCA.

e all of the above

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