Question 1

Franchises are classified as a plant asset.

Accepted Answer

A) True 
 B)False

Question 2

A truck costing $72,000 and on which $60,000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record this event would include a

Accepted Answer

A) gain of $12,000. 
B) loss of $12,000. 
C) credit to Accumulated Depreciation for $60,000. 
D) credit to Accumulated Depreciation for $72,000. 
A) gain of $12,000. 
B) loss of $12,000. 
C) credit to Accumulated Depreciation for $60,000. 
D) credit to Accumulated Depreciation for $72,000.

Question 3

The declining-balance method of depreciation produces a(n)

Accepted Answer

A) decreasing depreciation expense each period. 
B) increasing depreciation expense each period. 
C) declining percentage rate each period. 
D) constant amount of depreciation expense each period. 
A) decreasing depreciation expense each period. 
B) increasing depreciation expense each period. 
C) declining percentage rate each period. 
D) constant amount of depreciation expense each period.

Question 4

Which of the following assets does not decline in service potential over the course of its useful life?

Accepted Answer

A) Equipment. 
B) Furnishings. 
C) Land. 
D) Fixtures. 
A) Equipment. 
B) Furnishings. 
C) Land. 
D) Fixtures.

Question 5

In calculating depreciation, both plant asset cost and useful life are based on estimates.

Accepted Answer

A) True 
 B)False

Question 6

Plant assets are ordinarily presented in the balance sheet

Accepted Answer

A) at current market values. 
B) at replacement costs. 
C) at cost less accumulated depreciation. 
D) in a separate section along with intangible assets. 
A) at current market values. 
B) at replacement costs. 
C) at cost less accumulated depreciation. 
D) in a separate section along with intangible assets.

Question 7

A machine that was purchased on January 1 for $60,000 has an estimated salvage value of $12,000. If the machine's depreciation rate is 20%, its annual depreciation is

Accepted Answer

A) $12,000. 
B) $48,000. 
C) $9,600. 
D) $14,400. 
A) $12,000. 
B) $48,000. 
C) $9,600. 
D) $14,400.

Question 8

The return on assets ratio can be computed from the profit margin ratio and the asset turnover ratio.

Accepted Answer

A) True 
 B)False

Question 9

The following information is provided for Nguyen Company and Northwest Corporation. $\begin{array}{lll}\text { (in } \$ \text { millions) }&\text { Nguven Company }&\text { Northwest Corporation }\
\text { Net income } 2017 & \$ 165 & \$ 420 \
\text { Net sales } 2017 & 1,650 & 4,900 \
\text { Total assets } 12 / 31 / 15 & 1,000 & 2,400 \
\text { Total assets } 12 / 31 / 16 & 1,050 & 3,000 \
\text { Total assets } 12 / 31 / 17 & 1,150 & 4,000
\end{array}$ If Nguyen and Northwest are in the same industry and the industry average for asset turnover is equal to 1.20 times, which of the following statements is true?

Accepted Answer

A) Nguyen is operating more efficiently than the industry. 
B) Northwest is operating more efficiently than Nguyen. 
C) Both Nguyen and Northwest are operating more efficiently than the average company in their industry. 
D) The asset turnover does not address the question of efficient operations. 
A) Nguyen is operating more efficiently than the industry. 
B) Northwest is operating more efficiently than Nguyen. 
C) Both Nguyen and Northwest are operating more efficiently than the average company in their industry. 
D) The asset turnover does not address the question of efficient operations.

Question 10

Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises. $$\begin{array} { l r } 
\text { Cash } & \$ 1,500,000 \
\text { Accounts Receivable } & 1,000,000 \
\text { Trademarks } & 1,200,000 \
\text { Goodwill } & 2,500,000 \
\text { Research \& Development Costs } & 2,000,000
\end{array}$$

Accepted Answer

A) $9,700,000. 
B) $5,700,000. 
C) $3,700,000. 
D) $7,700,000. 
A) $9,700,000. 
B) $5,700,000. 
C) $3,700,000. 
D) $7,700,000.

Question 11

Machinery was purchased for $340,000. Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $60,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

Accepted Answer

A) $78,800. 
B) $66,800. 
C) $57,200. 
D) $56,000. 
A) $78,800. 
B) $66,800. 
C) $57,200. 
D) $56,000.

Question 12

On July 1, 2017, Dillman Kennels sells equipment for $110,000. The equipment originally cost $300,000, had an estimated 5-year life and an expected salvage value of $50,000. The Accumulated Depreciation account had a balance of $175,000 on January 1, 2017, using the straight-line method. The gain or loss on disposal is

Accepted Answer

A) $15,000 gain. 
B) $10,000 loss. 
C) $15,000 loss. 
D) $10,000 gain. 
A) $15,000 gain. 
B) $10,000 loss. 
C) $15,000 loss. 
D) $10,000 gain.

Question 13

The term applied to the periodic expiration of a plant asset's cost is

Accepted Answer

A) amortization. 
B) depletion. 
C) depreciation. 
D) cost expiration. 
A) amortization. 
B) depletion. 
C) depreciation. 
D) cost expiration.

Question 14

The following information is provided for Nguyen Company and Northwest Corporation. $\begin{array}{lll}\text { (in } \$ \text { millions) }&\text { Nguven Company }&\text { Northwest Corporation }\
\text { Net income } 2017 & \$ 165 & \$ 420 \
\text { Net sales } 2017 & 1,650 & 4,900 \
\text { Total assets } 12 / 31 / 15 & 1,000 & 2,400 \
\text { Total assets } 12 / 31 / 16 & 1,050 & 3,000 \
\text { Total assets } 12 / 31 / 17 & 1,150 & 4,000
\end{array}$ What is Northwest's asset turnover for 2017?

Accepted Answer

A) 1.40 times 
B) 1.63 times 
C) 1.81 times 
D) 1.23 times 
A) 1.40 times 
B) 1.63 times 
C) 1.81 times 
D) 1.23 times

Question 15

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

Accepted Answer

A) True 
 B)False

Question 16

The following information is provided for Nguyen Company and Northwest Corporation. $\begin{array}{lll}\text { (in } \$ \text { millions) }&\text { Nguven Company }&\text { Northwest Corporation }\
\text { Net income } 2017 & \$ 165 & \$ 420 \
\text { Net sales } 2017 & 1,650 & 4,900 \
\text { Total assets } 12 / 31 / 15 & 1,000 & 2,400 \
\text { Total assets } 12 / 31 / 16 & 1,050 & 3,000 \
\text { Total assets } 12 / 31 / 17 & 1,150 & 4,000
\end{array}$ What is Northwest's return on assets for 2017?

Accepted Answer

A) 15.6% 
B) 10.5% 
C) 14.0% 
D) 12.0% 
A) 15.6% 
B) 10.5% 
C) 14.0% 
D) 12.0%

Question 17

Kathy's Blooms purchased a delivery van with a $60,000 list price. The company was given a $6,000 cash discount by the dealer, and paid $3,000 sales tax. Annual insurance on the van is $1,500. As a result of the purchase, by how much will Kathy's Blooms increase its van account?

Accepted Answer

A) $60,000. 
B) $54,000. 
C) $58,500. 
D) $57,000. 
A) $60,000. 
B) $54,000. 
C) $58,500. 
D) $57,000.

Question 18

Additions and improvements to a plant asset that increase the asset's operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred.

Accepted Answer

A) True 
 B)False

Question 19

Equipment was purchased for $150,000. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $30,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

Accepted Answer

A) $35,400. 
B) $29,400. 
C) $24,600. 
D) $24,000. 
A) $35,400. 
B) $29,400. 
C) $24,600. 
D) $24,000.

Question 20

Rodgers Company purchased equipment and these costs were incurred: $\begin{array}{lr}
\text { Cash price } & \$ 55,000 \
\text { Sales taxes } & 3,600 \
\text { Insurance during transit } & 640 \
\text { Installation and testing } & 860 \
\text { Total costs } & \$ 60,100
\end{array}$ Rodgers will record the acquisition cost of the equipment as

Accepted Answer

A) $55,000. 
B) $58,600. 
C) $59,240. 
D) $60,100. 
A) $55,000. 
B) $58,600. 
C) $59,240. 
D) $60,100.

Franchises are classified as a plant asset.

A truck costing $72,000 and on which $60,000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record this event would include a

The declining-balance method of depreciation produces a(n)

Which of the following assets does not decline in service potential over the course of its useful life?

In calculating depreciation, both plant asset cost and useful life are based on estimates.

Plant assets are ordinarily presented in the balance sheet

A machine that was purchased on January 1 for $60,000 has an estimated salvage value of $12,000. If the machine's depreciation rate is 20%, its annual depreciation is

The return on assets ratio can be computed from the profit margin ratio and the asset turnover ratio.

Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises. Cash \ 1,500,000 Accounts Receivable 1,000,000 Trademarks 1,200,000 Goodwill 2,500,000 Research \& Development Costs 2,000,000

The term applied to the periodic expiration of a plant asset's cost is

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

Kathy's Blooms purchased a delivery van with a $60,000 list price. The company was given a $6,000 cash discount by the dealer, and paid $3,000 sales tax. Annual insurance on the van is $1,500. As a result of the purchase, by how much will Kathy's Blooms increase its van account?

Additions and improvements to a plant asset that increase the asset's operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred.

Rodgers Company purchased equipment and these costs were incurred: Cash price \ 55,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing 860 Total costs \ 60,100 Rodgers will record the acquisition cost of the equipment as

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 8: Reporting and Analyzing Long-Lived Assets

Franchises are classified as a plant asset.

A truck costing $72,000 and on which $60,000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record this event would include a

The declining-balance method of depreciation produces a(n)

Which of the following assets does not decline in service potential over the course of its useful life?

In calculating depreciation, both plant asset cost and useful life are based on estimates.

Plant assets are ordinarily presented in the balance sheet

A machine that was purchased on January 1 for $60,000 has an estimated salvage value of $12,000. If the machine's depreciation rate is 20%, its annual depreciation is

The return on assets ratio can be computed from the profit margin ratio and the asset turnover ratio.

Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises. Cash \ 1,500,000 Accounts Receivable 1,000,000 Trademarks 1,200,000 Goodwill 2,500,000 Research \& Development Costs 2,000,000

The term applied to the periodic expiration of a plant asset's cost is

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

Kathy's Blooms purchased a delivery van with a $60,000 list price. The company was given a $6,000 cash discount by the dealer, and paid $3,000 sales tax. Annual insurance on the van is $1,500. As a result of the purchase, by how much will Kathy's Blooms increase its van account?

Additions and improvements to a plant asset that increase the asset's operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred.

Rodgers Company purchased equipment and these costs were incurred: Cash price \ 55,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing 860 Total costs \ 60,100 Rodgers will record the acquisition cost of the equipment as

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters