Realistic Company purchased a new truck on January 1, 20X1. The truck cost $20,000, has a four-year life, and a $4,000 residual value. The company has a December 31 year end. If Realistic Company depreciates the truck by the straight-line method, how much should Realistic report as the book value of the truck at the end of 20X3?

Realistic Company purchased a new truck on January 1, 20X1. The truck cost $20,000, has a four-year life, and a $4,000 residual value. The company has a December 31 year end. If Realistic Company depreciates the truck by the straight-line method, how much should Realistic report as the book value of the truck at the end of 20X3?

a. $1,600
b. $4,000
c. $8,000
d. $16,000
e. $15,000

Answer: C

The trial balance:

The trial balance:

a. Is a formal financial statement.
b. Is used to prove that there are no errors in the journal or ledger.
c. Provides a listing of every account in the chart of accounts.
d. Provides a listing of the balance of each ledger account.
e. None of these

Answer: D

The proper journal entry to record Ransom Company's billing of clients for $500 of services rendered is:

The proper journal entry to record Ransom Company's billing of clients for $500 of services rendered is:

a. Dr. Cash 500
Cr. Accounts Receivable 500
b. Dr. Accounts Receivable 500
Cr. capital Stock 500
c. Dr. Accounts Receivable 500
Cr. Service Revenue 500
d. Dr. Cash 500
Cr. Service Revenue 500
e. None of these

Answer: C

Of the following account types, which would be increased by a debit?

Of the following account types, which would be increased by a debit?

a. Liabilities and expenses.
b. Assets and equity.
c. Assets and expenses.
d. Equity and revenues.
e. None of these

Answer: C

Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

January 2 Beginning Inventory: 500 units at $3.00
April 7 Purchased : 1,100 units at $3.20
June 30 Purchased : 400 units at $4.00
December 7 Purchased : 1,600 units at $4.40
Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method,
cost of goods sold would be:


a. $2,780
b. $3,960
c. $9,700
d. $10,880
e. $10,000

Answer: D

Inventory accounts should be classified in which section of a balance sheet?

Inventory accounts should be classified in which section of a balance sheet?

a. Current assets
b. Investments
c. Intangible assets
d. Tangible assets
e. Non-current assets

Answer: A