Question 1

Under the declining-balance method, salvage value is considered directly in the determination of the depreciation amount.

Accepted Answer

A) True 
 B)False

Question 2

The write-off of the cost of a wasting asset is called amortization.

Accepted Answer

A) True 
 B)False

Question 3

The depreciation method using a steadily decreasing rate applied to the depreciable cost of the asset, resulting in successively smaller depreciation charges over the life of the asset is called the

Accepted Answer

A)  declining-balance method. 
B)  sum-of-the-years'-digit method. 
C)  units-of-production method. 
D)  straight-line method. 
A)  declining-balance method. 
B)  sum-of-the-years'-digit method. 
C)  units-of-production method. 
D)  straight-line method.

Question 4

Match the terms with the definitions.
-The loss of usefulness because of deterioration from age and wear.

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 5

Assets such as patents, copyrights, and trademarks are intangible assets.

Accepted Answer

A) True 
 B)False

Question 6

Gains are similar to revenue and increase net income, and losses are similar to expenses and decrease net income.

Accepted Answer

A) True 
 B)False

Question 7

An asset is purchased on January 1 at a cost of $78,000. It is expected to be used for five years and have a salvage value of $8,000. Calculate the depreciation expense for each year of the asset's useful life under each of the following methods:
a.
Straight-line method
b.
Double-declining-balance method
c.
Sum-of-the-years-digits' method

Accepted Answer

The answer of An asset is purchased on January 1...

Question 8

In accounting for exchanges of similar assets considered to have "commercial substance," financial accounting recognizes all gains and losses.

Accepted Answer

A) True 
 B)False

Question 9

Under the Modified Accelerated Cost Recovery System (MACRS) depreciation method, the salvage value is

Accepted Answer

A)  added to the cost of the asset. 
B)  ignored. 
C)  subtracted from the cost of the asset. 
D)  added to the straight-line depreciation. 
A)  added to the cost of the asset. 
B)  ignored. 
C)  subtracted from the cost of the asset. 
D)  added to the straight-line depreciation.

Question 10

Depreciation is a process of cost allocation, not a process of valuation.

Accepted Answer

A) True 
 B)False

Question 11

Prepare journal entries for the following transactions for Star Haulage InC.Jan. 1
Replaced the engine in Truck #1, paying cash, $5,400.
Feb. 13
Paid cash for a tune-up of the engine in Truck #2, $570.
19
Paid cash to add a lift to Truck #2, $3,700.
​

Accepted Answer

The answer of Prepare journal entries for the following transactions...

Question 12

A delivery truck that cost $26,000 has been owned for 3 years and is traded in for another delivery truck to be used for a similar purpose. Depreciation in the amount of $5,200 has been taken each year⎯a total of $15,600. If the trade-in value of the old truck is $12,000 and the new truck has a fair market value of $30,000, the new truck would be recorded at

Accepted Answer

A)  $10,400. 
B)  $12,000. 
C)  $29,400. 
D)  $30,000. 
A)  $10,400. 
B)  $12,000. 
C)  $29,400. 
D)  $30,000.

Question 13

A farm tractor costing $80,000 is depreciated using the MACRS method. The tractor qualifies as a 3-year property, has a scrap value of $20,000, and is depreciated at the following rates: Year 1, 33.33%; Year 2, 44.45%; Year 3, 14.81%; and Year 4, 7.41%. The amount of depreciation to be entered for the second year would be

Accepted Answer

A)  $20,000. 
B)  $26,670. 
C)  $35,560. 
D)  $44,450. 
A)  $20,000. 
B)  $26,670. 
C)  $35,560. 
D)  $44,450.

Question 14

Over the life of an asset, the total of the amounts of the calculated annual net income will be about the same, regardless of the method of depreciation.

Accepted Answer

A) True 
 B)False

Question 15

For tax purposes, both gains and losses are recognized on exchanges of similar assets.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is NOT a way of calculating the amount of depreciation for each period?

Accepted Answer

A)  straight-line method 
B)  declining-balance method 
C)  sum-of-the-years'-digit method 
D)  weighted-average method 
A)  straight-line method 
B)  declining-balance method 
C)  sum-of-the-years'-digit method 
D)  weighted-average method

Question 17

The cost of planting trees and shrubs, installing fences, and paving parking areas are normally charged to the land improvements account and are later depreciated over their expected useful lives.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  declining-balance method. 
B)  sum-of-the-years'-digit method. 
C)  units-of-production method. 
D)  straight-line method. 
A)  declining-balance method. 
B)  sum-of-the-years'-digit method. 
C)  units-of-production method. 
D)  straight-line method.

Question 19

Tangible assets include

Accepted Answer

A)  patents. 
B)  cash. 
C)  trademarks. 
D)  copyrights. 
A)  patents. 
B)  cash. 
C)  trademarks. 
D)  copyrights.

Question 20

The accounting entry for additions and improvements that increase the usefulness of equipment includes

Accepted Answer

A)  debiting a liability account and crediting Building or Equipment. 
B)  debiting Cash and crediting Building or Equipment. 
C)  debiting Building or Equipment and crediting Cash or a liability account. 
D)  debiting Building Expense or Equipment Expense and crediting Cash or a liability account. 
A)  debiting a liability account and crediting Building or Equipment. 
B)  debiting Cash and crediting Building or Equipment. 
C)  debiting Building or Equipment and crediting Cash or a liability account. 
D)  debiting Building Expense or Equipment Expense and crediting Cash or a liability account.

Exam 18: Accounting for Long-Term Assets

Under the declining-balance method, salvage value is considered directly in the determination of the depreciation amount.

The write-off of the cost of a wasting asset is called amortization.

The depreciation method using a steadily decreasing rate applied to the depreciable cost of the asset, resulting in successively smaller depreciation charges over the life of the asset is called the

Match the terms with the definitions. -The loss of usefulness because of deterioration from age and wear.

Assets such as patents, copyrights, and trademarks are intangible assets.

Gains are similar to revenue and increase net income, and losses are similar to expenses and decrease net income.

In accounting for exchanges of similar assets considered to have "commercial substance," financial accounting recognizes all gains and losses.

Under the Modified Accelerated Cost Recovery System (MACRS) depreciation method, the salvage value is

Depreciation is a process of cost allocation, not a process of valuation.

Prepare journal entries for the following transactions for Star Haulage InC.Jan. 1 Replaced the engine in Truck #1, paying cash, $5,400. Feb. 13 Paid cash for a tune-up of the engine in Truck #2, $570. 19 Paid cash to add a lift to Truck #2, $3,700. ​

Over the life of an asset, the total of the amounts of the calculated annual net income will be about the same, regardless of the method of depreciation.

For tax purposes, both gains and losses are recognized on exchanges of similar assets.

Which of the following is NOT a way of calculating the amount of depreciation for each period?

The cost of planting trees and shrubs, installing fences, and paving parking areas are normally charged to the land improvements account and are later depreciated over their expected useful lives.

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

Tangible assets include

The accounting entry for additions and improvements that increase the usefulness of equipment includes

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

Filters

Prepare journal entries for the following transactions for Star Haulage InC.Jan. 1 Replaced the engine in Truck #1, paying cash, $5,400. Feb. 13 Paid cash for a tune-up of the engine in Truck #2, $570. 19 Paid cash to add a lift to Truck #2, $3,700.