Question 1

The write-off of the cost of an intangible asset is called

Accepted Answer

A)  physical depreciation. 
B)  functional depreciation. 
C)  amortization. 
D)  deterioration. 
A)  physical depreciation. 
B)  functional depreciation. 
C)  amortization. 
D)  deterioration.

Question 2

The purpose of depreciation is to match a plant asset's cost with the revenue it helps to produce.

Accepted Answer

A) True 
 B)False

Question 3

The depreciation method that estimates the number of units of service or output that can be provided by an asset and allocates the depreciable cost of the asset on the basis of the use or output during each period is called the units-of-output or units-of-production method.

Accepted Answer

A) True 
 B)False

Question 4

The depreciation method using a fixed rate applied to the book value of the asset each year, resulting in successively smaller depreciation charges as the undepreciated cost diminishes year by year, is called the declining balance method.

Accepted Answer

A) True 
 B)False

Question 5

All costs incurred to purchase land and prepare it for its intended use are credited to the land account.

Accepted Answer

A) True 
 B)False

Question 6

If there is an improvement to a building that extends the life of the building, the total cost incurred should be debited to the long-term asset.

Accepted Answer

A) True 
 B)False

Question 7

An asset purchased on or before the fifteenth of the month is considered to have been owned for the full month.

Accepted Answer

A) True 
 B)False

Question 8

Match the terms with the definitions.
-Long-term tangible assets that are used in the operations of the business.

Accepted Answer

A) Accelerated Cost Recovery System (ACRS) 
B) accelerated depreciation methods 
C) amortization 
D) trademark 
E) cash equivalent price
F)long-term assets
G)copyright
H)cost
I)patent
J)depreciable cost (base)
K)depreciation
L)physical depreciation
M)tangible assets
N)sum-of-the-years'-digits method
O)salvage value
P)property, plant, and equipment 
A) Accelerated Cost Recovery System (ACRS) 
B) accelerated depreciation methods 
C) amortization 
D) trademark 
E) cash equivalent price
F)long-term assets
G)copyright
H)cost
I)patent
J)depreciable cost (base)
K)depreciation
L)physical depreciation
M)tangible assets
N)sum-of-the-years'-digits method
O)salvage value
P)property, plant, and equipment

Question 9

If an asset is being sold or exchanged, the gain or loss is always computed by comparing the

Accepted Answer

A)  market value and book value. 
B)  market value and salvage value. 
C)  book value and salvage value. 
D)  market value and cost. 
A)  market value and book value. 
B)  market value and salvage value. 
C)  book value and salvage value. 
D)  market value and cost.

Question 10

The consumption or exhaustion of wasting assets is called depletion.

Accepted Answer

A) True 
 B)False

Question 11

Match the terms with the definitions.
-Depreciation methods that provide for a higher depreciation charge in the first year of an asset's life and gradually decreasing charges in subsequent years.

Accepted Answer

A) Accelerated Cost Recovery System (ACRS) 
B) accelerated depreciation methods 
C) amortization 
D) trademark 
E) cash equivalent price
F)long-term assets
G)copyright
H)cost
I)patent
J)depreciable cost (base)
K)depreciation
L)physical depreciation
M)tangible assets
N)sum-of-the-years'-digits method
O)salvage value
P)property, plant, and equipment 
A) Accelerated Cost Recovery System (ACRS) 
B) accelerated depreciation methods 
C) amortization 
D) trademark 
E) cash equivalent price
F)long-term assets
G)copyright
H)cost
I)patent
J)depreciable cost (base)
K)depreciation
L)physical depreciation
M)tangible assets
N)sum-of-the-years'-digits method
O)salvage value
P)property, plant, and equipment

Question 12

Match the terms with the definitions.
-A depreciation method in which the annual depreciation is determined by multiplying the depreciable cost by a schedule of fractions.

Accepted Answer

A) Accelerated Cost Recovery System (ACRS) 
B) accelerated depreciation methods 
C) amortization 
D) trademark 
E) cash equivalent price
F)long-term assets
G)copyright
H)cost
I)patent
J)depreciable cost (base)
K)depreciation
L)physical depreciation
M)tangible assets
N)sum-of-the-years'-digits method
O)salvage value
P)property, plant, and equipment 
A) Accelerated Cost Recovery System (ACRS) 
B) accelerated depreciation methods 
C) amortization 
D) trademark 
E) cash equivalent price
F)long-term assets
G)copyright
H)cost
I)patent
J)depreciable cost (base)
K)depreciation
L)physical depreciation
M)tangible assets
N)sum-of-the-years'-digits method
O)salvage value
P)property, plant, and equipment

Question 13

For plant assets acquired after 1986, either the double-declining-balance method or the Modified Accelerated Cost Recovery System (MACRS) must be used for tax purposes.

Accepted Answer

A) True 
 B)False

Question 14

Equipment that has no exchange or sales value, originally cost $875, and has depreciation totaling $700. The transaction to discard the equipment would result in a

Accepted Answer

A)  loss of $175. 
B)  gain of $175. 
C)  loss of $800. 
D)  loss of $875. 
A)  loss of $175. 
B)  gain of $175. 
C)  loss of $800. 
D)  loss of $875.

Question 15

Use the following data: $$\begin{array} { l c } 
\text { Asset cost } & \$ 80,000 \
\text { Expected life } & 3 \text { years } \
\text { Estimated salvage value } & \$ 7,000
\end{array}$$ Using the declining-balance method, the amount of depreciation for the first year would be

Accepted Answer

A)  $26,666.67. 
B)  $24,333.33. 
C)  $53,333.33. 
D)  $48,666.67. 
A)  $26,666.67. 
B)  $24,333.33. 
C)  $53,333.33. 
D)  $48,666.67.

Question 16

Match the terms with the definitions.
-A federal grant of the exclusive right to the reproduction and sale of a literary, artistic, or musical composition.

Accepted Answer

A) Accelerated Cost Recovery System (ACRS) 
B) accelerated depreciation methods 
C) amortization 
D) trademark 
E) cash equivalent price
F)long-term assets
G)copyright
H)cost
I)patent
J)depreciable cost (base)
K)depreciation
L)physical depreciation
M)tangible assets
N)sum-of-the-years'-digits method
O)salvage value
P)property, plant, and equipment 
A) Accelerated Cost Recovery System (ACRS) 
B) accelerated depreciation methods 
C) amortization 
D) trademark 
E) cash equivalent price
F)long-term assets
G)copyright
H)cost
I)patent
J)depreciable cost (base)
K)depreciation
L)physical depreciation
M)tangible assets
N)sum-of-the-years'-digits method
O)salvage value
P)property, plant, and equipment

Question 17

Accumulated depletion should be reported as an operating expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 18

Assume that an asset costing $72,000 is expected to produce 500,000 units and have a salvage value of $6,000. The first year, 90,000 units are produced; the second year, 82,000 units are produced; the third year, 94,000 units are produced. Using the units-of-production method, complete the following:

Accepted Answer

The answer of Assume that an asset costing $72,000 is...

Question 19

The Modified Accelerated Cost Recovery System method of depreciation subtracts salvage value before calculating the annual depreciation expense.

Accepted Answer

A) True 
 B)False

Question 20

A manufacturer or seller of a product may identify its merchandise and bar other manufacturers from using the same identification by obtaining

Accepted Answer

A)  a patent. 
B)  a copyright. 
C)  a trademark. 
D)  letterhead stationery. 
A)  a patent. 
B)  a copyright. 
C)  a trademark. 
D)  letterhead stationery.

Exam 18: Accounting for Long-Term Assets

The write-off of the cost of an intangible asset is called

The purpose of depreciation is to match a plant asset's cost with the revenue it helps to produce.

The depreciation method that estimates the number of units of service or output that can be provided by an asset and allocates the depreciable cost of the asset on the basis of the use or output during each period is called the units-of-output or units-of-production method.

The depreciation method using a fixed rate applied to the book value of the asset each year, resulting in successively smaller depreciation charges as the undepreciated cost diminishes year by year, is called the declining balance method.

All costs incurred to purchase land and prepare it for its intended use are credited to the land account.

If there is an improvement to a building that extends the life of the building, the total cost incurred should be debited to the long-term asset.

An asset purchased on or before the fifteenth of the month is considered to have been owned for the full month.

Match the terms with the definitions. -Long-term tangible assets that are used in the operations of the business.

If an asset is being sold or exchanged, the gain or loss is always computed by comparing the

The consumption or exhaustion of wasting assets is called depletion.

Match the terms with the definitions. -Depreciation methods that provide for a higher depreciation charge in the first year of an asset's life and gradually decreasing charges in subsequent years.

Match the terms with the definitions. -A depreciation method in which the annual depreciation is determined by multiplying the depreciable cost by a schedule of fractions.

For plant assets acquired after 1986, either the double-declining-balance method or the Modified Accelerated Cost Recovery System (MACRS) must be used for tax purposes.

Equipment that has no exchange or sales value, originally cost $875, and has depreciation totaling $700. The transaction to discard the equipment would result in a

Use the following data: Asset cost \ 80,000 Expected life 3 years Estimated salvage value \ 7,000 Using the declining-balance method, the amount of depreciation for the first year would be

Match the terms with the definitions. -A federal grant of the exclusive right to the reproduction and sale of a literary, artistic, or musical composition.

Accumulated depletion should be reported as an operating expense on the income statement.

The Modified Accelerated Cost Recovery System method of depreciation subtracts salvage value before calculating the annual depreciation expense.

A manufacturer or seller of a product may identify its merchandise and bar other manufacturers from using the same identification by obtaining

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

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