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exam2 Key - Acct 3311 Exam 2 Chapters 6 7 8 1 Assume ABC...

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Acct. 3311, Exam 2, Chapters 6, 7, 8. 1. Assume ABC Company deposits $25,000 with First National Bank in an account earning interest at 6% per annum, compounded semi-annually. How much will ABC have in the account after five years if interest is reinvested? A) $33,598. B) $25,000. C) $32,500. D) $33,456. E) Some other amount. 2. A machine is purchased by making payments of $5,000 at the beginning of each of the next five years. The interest rate was 10%. What was the cost of the machine? A) $33,578 B) $30,526 C) $20,849 D) $18,954 E) Some other amount. 3. Lane Co. has a machine that cost $200,000. It is to be leased for 20 years with rent received at the beginning of each year. Lane wants a return of 10%. Calculate the amount of the annual rent. A) $21,356 B) $23,909 C) $29,728 D) $23,492 E) Some other amount. 4. If a company uses the periodic inventory system, what is the impact on net income of including goods in transit f.o.b. shipping point in purchases, but not ending inventory? A) Overstate net income. B) Understate net income. C) No effect on net income. D) Not sufficient information to determine effect on net income. 5. What is consigned inventory? A) Goods that are shipped, but title transfers to the receiver. B) Goods that are sold, but payment is not required until the goods are sold. C) Goods that are shipped, but title remains with the shipper. D) Goods that have been segregated for shipment to a customer.
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6. Web World began using dollar-value LIFO for costing its inventory last year. The base year layer consists of $250,000. Assuming the current inventory at end of year prices equals $345,000 and the index for the current
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exam2 Key - Acct 3311 Exam 2 Chapters 6 7 8 1 Assume ABC...

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