Ac 116 Midterm Question Paper

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AC 116 MIDTERM QUESTIONS AND ANSWERS Chapter 8 1. A necessary element of internal control is |a. |database | |b. |systems design | |c. |systems analysis | |d. |information and communication | ANS: D 2. An example of a preventive control is |a. |the use of a bank account…show more content…
A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $2,000, would have a cost basis of |a. |$92,000 | |b. |$91,000 | |c. |$87,000 | |d. |$86,000 | ANS: A 25. In a lease contract, the party who legally owns the asset is the |a. |lessee | |b. |lessor | |c. |operator…show more content…
|$40,000 | ANS: A 27. Equipment with a cost of $80,000, an estimated residual value of $5,000, and an estimated life of 15 years was depreciated by the straight-line method for 5 years. Due to obsolescence, it was determined that the useful life should be shortened by 5 years and the residual value changed to zero. The depreciation expense for the current and future years is |a. |$5,500 | |b. |$11,000 | |c. |$10,000 | |d. |$5,000 | ANS: B 28. The proper journal entry to purchase a computer on account to be utilized within the business would be: |a. |Jan 2 Office Supplies 1,250.00

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