Question 1

The loss of usefulness because of deterioration from age and wear is called

Accepted Answer

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

Question 2

The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years 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 3

A truck was purchased on January 2 at a cost of $60,000. It is expected to be used for 5 years and to have a salvage value of $5,000 after 120,000 miles of service. The truck was driven 23,000 miles the first year and 25,000 miles the second year. Calculate the depreciation expense for the 1st and 2nd years. $\begin{array}{lrr}&\text { Year } 1&\text { Year } 2\
\text { Straight-line } & \_\_\_\_ &\_\_\_\_\
\text { Declining-balance (double) } &\_\_\_\_&\_\_\_\_ \
\text { Sum-of-the-years-digits' } & \_\_\_\_&\_\_\_\_ \
\text { Units-of-production } &\_\_\_\_&\_\_\_\_
\end{array}$

Accepted Answer

Question 4

An asset is purchased on January 1 at a cost of $25,000. It is expected to be used for four years and have a salvage value of $1,000. 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 5

The write-off of the cost of plant and equipment is called

Accepted Answer

A)  depletion. 
B)  depreciation. 
C)  amortization. 
D)  deterioration. 
A)  depletion. 
B)  depreciation. 
C)  amortization. 
D)  deterioration.

Question 6

Match the terms with the definitions.
-The portion of a plant asset's cost that is recognized as expense.

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 7

Match the terms with the definitions.
-The loss of usefulness because of inadequacy or obsolescence.

Accepted Answer

A) Accelerated Cost Recovery System (ACRS) 
B) intangible assets 
C) Modified Accelerated Cost Recovery System (MACRS) 
D) book value 
E) cash equivalent price
F)conservatism
G)straight-line method
H)tangible assets
I)depletion
J)depreciable cost (base)
K)trade-in allowance (trade value)
L)double-declining-balance method
M)functional depreciation
N)units-of-production method 
A) Accelerated Cost Recovery System (ACRS) 
B) intangible assets 
C) Modified Accelerated Cost Recovery System (MACRS) 
D) book value 
E) cash equivalent price
F)conservatism
G)straight-line method
H)tangible assets
I)depletion
J)depreciable cost (base)
K)trade-in allowance (trade value)
L)double-declining-balance method
M)functional depreciation
N)units-of-production method

Question 8

Normal expenditures for repairs and maintenance to plant and equipment are accounted for by

Accepted Answer

A)  debiting Equipment and crediting Cash and Supplies Inventory. 
B)  debiting Repairs Expense and crediting Cash and Supplies Inventory. 
C)  debiting Cash and Supplies Inventory and crediting Repairs Expense. 
D)  debiting Cash and Supplies Inventory and crediting Equipment. 
A)  debiting Equipment and crediting Cash and Supplies Inventory. 
B)  debiting Repairs Expense and crediting Cash and Supplies Inventory. 
C)  debiting Cash and Supplies Inventory and crediting Repairs Expense. 
D)  debiting Cash and Supplies Inventory and crediting Equipment.

Question 9

Match the terms with the definitions.
-An accelerated depreciation method in which the book value is multiplied by twice the straight-line rate.

Accepted Answer

A) Accelerated Cost Recovery System (ACRS) 
B) intangible assets 
C) Modified Accelerated Cost Recovery System (MACRS) 
D) book value 
E) cash equivalent price
F)conservatism
G)straight-line method
H)tangible assets
I)depletion
J)depreciable cost (base)
K)trade-in allowance (trade value)
L)double-declining-balance method
M)functional depreciation
N)units-of-production method 
A) Accelerated Cost Recovery System (ACRS) 
B) intangible assets 
C) Modified Accelerated Cost Recovery System (MACRS) 
D) book value 
E) cash equivalent price
F)conservatism
G)straight-line method
H)tangible assets
I)depletion
J)depreciable cost (base)
K)trade-in allowance (trade value)
L)double-declining-balance method
M)functional depreciation
N)units-of-production method

Question 10

Match the terms with the definitions.
-The estimated market value of an asset on its expected disposal date.

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 11

The recognition of depreciation is not intended to make the assets reflect their market value on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

Match the terms with the definitions.
-A registered trade name or symbol that identifies a firm's merchandise.

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

A personal computer that originally cost $5,000 has no estimated salvage value and was depreciated at the rate of 20% a year. At the end of the third year, the computer was sold for $1,500 cash. The transaction would result in a

Accepted Answer

A)  gain of $1,500. 
B)  loss of $1,500. 
C)  gain of $250. 
D)  loss of $250. 
A)  gain of $1,500. 
B)  loss of $1,500. 
C)  gain of $250. 
D)  loss of $250.

Question 14

Special tax assessments for streets, sewers, flood prevention, or parks are charged or added to the land account.

Accepted Answer

A) True 
 B)False

Question 15

Match the terms with the definitions.
-The consumption or exhaustion of natural resources.

Accepted Answer

A) Accelerated Cost Recovery System (ACRS) 
B) intangible assets 
C) Modified Accelerated Cost Recovery System (MACRS) 
D) book value 
E) cash equivalent price
F)conservatism
G)straight-line method
H)tangible assets
I)depletion
J)depreciable cost (base)
K)trade-in allowance (trade value)
L)double-declining-balance method
M)functional depreciation
N)units-of-production method 
A) Accelerated Cost Recovery System (ACRS) 
B) intangible assets 
C) Modified Accelerated Cost Recovery System (MACRS) 
D) book value 
E) cash equivalent price
F)conservatism
G)straight-line method
H)tangible assets
I)depletion
J)depreciable cost (base)
K)trade-in allowance (trade value)
L)double-declining-balance method
M)functional depreciation
N)units-of-production method

Question 16

Assets that are NOT expected to provide benefits for a number of accounting periods are called

Accepted Answer

A)  property, plant, and equipment. 
B)  long-term assets. 
C)  fixed assets. 
D)  current assets. 
A)  property, plant, and equipment. 
B)  long-term assets. 
C)  fixed assets. 
D)  current assets.

Question 17

Use the following data: $$\begin{array} { l r } 
\text { Asset cost } & \$ 120,000 \
\text { Expected life } & 4 \text { years } \
\text { Estimated salvage value } & \$ 12,000
\end{array}$$ ? Using the sum-of-the-years-digit method, the amount of depreciation for the third year would be

Accepted Answer

A)  $28,000. 
B)  $21,600. 
C)  $30,000. 
D)  $48,600. 
A)  $28,000. 
B)  $21,600. 
C)  $30,000. 
D)  $48,600.

Question 18

A coal mine was acquired at a cost of $4,000,000. No salvage value was expected and the estimated number of units available for production was 4,000,000 tons. During the first year, 440,000 tons of coal was mined and sold. The depletion expense for the first year was

Accepted Answer

A)  $44,200. 
B)  $440,000. 
C)  $4,000,000. 
D)  $4,400,000. 
A)  $44,200. 
B)  $440,000. 
C)  $4,000,000. 
D)  $4,400,000.

Question 19

Properties whose physical substance consists of natural resources that are consumed in the operation of the business are called

Accepted Answer

A)  depreciable assets. 
B)  wasting assets. 
C)  amortizable assets. 
D)  intangible assets. 
A)  depreciable assets. 
B)  wasting assets. 
C)  amortizable assets. 
D)  intangible assets.

Question 20

A trade-in allowance cannot be greater than the book value of the asset traded.

Accepted Answer

A) True 
 B)False

Exam 18: Accounting for Long-Term Assets

The loss of usefulness because of deterioration from age and wear is called

The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years is called the

The write-off of the cost of plant and equipment is called

Match the terms with the definitions. -The portion of a plant asset's cost that is recognized as expense.

Match the terms with the definitions. -The loss of usefulness because of inadequacy or obsolescence.

Normal expenditures for repairs and maintenance to plant and equipment are accounted for by

Match the terms with the definitions. -An accelerated depreciation method in which the book value is multiplied by twice the straight-line rate.

Match the terms with the definitions. -The estimated market value of an asset on its expected disposal date.

The recognition of depreciation is not intended to make the assets reflect their market value on the balance sheet.

Match the terms with the definitions. -A registered trade name or symbol that identifies a firm's merchandise.

A personal computer that originally cost $5,000 has no estimated salvage value and was depreciated at the rate of 20% a year. At the end of the third year, the computer was sold for $1,500 cash. The transaction would result in a

Special tax assessments for streets, sewers, flood prevention, or parks are charged or added to the land account.

Match the terms with the definitions. -The consumption or exhaustion of natural resources.

Assets that are NOT expected to provide benefits for a number of accounting periods are called

Use the following data: Asset cost \ 120,000 Expected life 4 years Estimated salvage value \ 12,000 ? Using the sum-of-the-years-digit method, the amount of depreciation for the third year would be

A coal mine was acquired at a cost of $4,000,000. No salvage value was expected and the estimated number of units available for production was 4,000,000 tons. During the first year, 440,000 tons of coal was mined and sold. The depletion expense for the first year was

Properties whose physical substance consists of natural resources that are consumed in the operation of the business are called

A trade-in allowance cannot be greater than the book value of the asset traded.

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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