Question 1

Another name for residual value is

Accepted Answer

A)  Book value 
B)  Salvage value 
C)  Carrying value 
D)  Current value 
A)  Book value 
B)  Salvage value 
C)  Carrying value 
D)  Current value

Question 2

Long-term operating assets have value because they are expected to

Accepted Answer

A)  Help a company generate expenses this period 
B)  Help a company generate cash flows this period 
C)  Help a company generate expenses in the future 
D)  Help a company generate cash flows in the future 
A)  Help a company generate expenses this period 
B)  Help a company generate cash flows this period 
C)  Help a company generate expenses in the future 
D)  Help a company generate cash flows in the future

Question 3

In order to calculate periodic depreciation expense, which of the following need NOT be known about an asset?

Accepted Answer

A)  Its acquisition cost 
B)  Its estimated salvage value 
C)  The amount of the cash down payment 
D)  Its estimated useful life 
A)  Its acquisition cost 
B)  Its estimated salvage value 
C)  The amount of the cash down payment 
D)  Its estimated useful life

Question 4

In order to calculate the third year's depreciation on an asset using the sum-of-the-years'-digits method, which of the following must be known about the asset?

Accepted Answer

A)  Its acquisition cost 
B)  Its estimated salvage value 
C)  Its estimated useful life 
D)  All of these must be known 
A)  Its acquisition cost 
B)  Its estimated salvage value 
C)  Its estimated useful life 
D)  All of these must be known

Question 5

Which of the following is NOT a current asset?

Accepted Answer

A)  Marketable Securities 
B)  Cash 
C)  Accounts Receivable 
D)  Property, Plant, and Equipment 
A)  Marketable Securities 
B)  Cash 
C)  Accounts Receivable 
D)  Property, Plant, and Equipment

Question 6

To properly evaluate the purchase of a long-term asset, the expected future cash flows must be adjusted for

Accepted Answer

A)  Property taxes 
B)  Interest 
C)  Time value of money 
D)  Future revenues 
A)  Property taxes 
B)  Interest 
C)  Time value of money 
D)  Future revenues

Question 7

Luray Company purchased a new $40,000 truck on January 1, 2012. The truck was expected to last 4 years and have no salvage value. During 2013, Loray's depreciation expense on the truck was $12,000. Which of the following depreciation methods is Loray Company using to depreciate the truck?

Accepted Answer

A)  Sum-of-the-years'-digits 
B)  Double-declining-balance 
C)  150-percent-declining balance 
D)  Straight-line 
A)  Sum-of-the-years'-digits 
B)  Double-declining-balance 
C)  150-percent-declining balance 
D)  Straight-line

Question 8

Furniture with a list price of $6,000 is purchased on account for $5,000. Which of the following entries properly records this transaction?

Accepted Answer

A)  
  
B)  
  
C)  
  
D)  
  
A)  
  
B)  
  
C)  
  
D)

Question 9

Trans-State Movers purchased a truck on January 1, 2011, for $51,375. At the time of purchase, the truck was estimated to have a useful life of 6 years and a residual value of $3,375. In 2012, Trans-State determined that the truck had a total useful life of 10 years and the residual value is unchanged. If Trans-State uses the straight-line method of depreciation, what will be the 2012 depreciation expense for the truck?

Accepted Answer

A)  $4,444 
B)  $4,732 
C)  $6,625 
D)  $8,000 
A)  $4,444 
B)  $4,732 
C)  $6,625 
D)  $8,000

Question 10

If the estimate of an asset's useful life is changed, then

Accepted Answer

A)  Depreciation expense for all past periods must be recalculated 
B)  There is no change in the amount of depreciation expense recorded for future years 
C)  Only the depreciation expense in the remaining years is changed 
D)  None of these are true 
A)  Depreciation expense for all past periods must be recalculated 
B)  There is no change in the amount of depreciation expense recorded for future years 
C)  Only the depreciation expense in the remaining years is changed 
D)  None of these are true

Question 11

A machine is purchased on January 1, 2012, for $72,000 cash. The machine has an estimated useful life of 8 years and a salvage value of $17,200. If the double-declining-balance method of depreciation is used, what will be the machine's book value as of December 31, 2013?

Accepted Answer

A)  $54,000 
B)  $40,500 
C)  $13,500 
D)  $31,500 
A)  $54,000 
B)  $40,500 
C)  $13,500 
D)  $31,500

Question 12

The book value of an asset is the

Accepted Answer

A)  Original cost of the asset 
B)  Market value of the asset 
C)  Total of all expenses associated with the asset 
D)  Acquisition cost of the asset less any accumulated depreciation on the asset 
A)  Original cost of the asset 
B)  Market value of the asset 
C)  Total of all expenses associated with the asset 
D)  Acquisition cost of the asset less any accumulated depreciation on the asset

Question 13

Spears Corporation bought a machine on January 1, 2011. In purchasing the machine, the company paid $50,000 cash and signed an interest-bearing note for $100,000. The estimated useful life of the machine is 5 years, after which time the salvage value is expected to be $15,000. The machine is expected to produce 67,500 widgets during its useful life. Given this information, if 10,000 widgets are produced in 2012, how much depreciation should be recorded in 2012, assuming that Spears Corporation uses the units-of-production depreciation method?

Accepted Answer

A)  $22,222 
B)  $20,000 
C)  $30,000 
D)  $40,000 
A)  $22,222 
B)  $20,000 
C)  $30,000 
D)  $40,000

Question 14

Rexford Company purchased a machine on January 1, 2012, for $57,600 cash. The machine has an estimated useful life of 8 years and a salvage value of $15,040. Rexford uses the double-declining-balance method of depreciation for all its assets. What will be the depreciation expense for 2012?

Accepted Answer

A)  $15,600 
B)  $14,400 
C)  $10,640 
D)  $7,200 
A)  $15,600 
B)  $14,400 
C)  $10,640 
D)  $7,200

Question 15

Boone Company purchased a piece of machinery by paying $5,000 cash. In addition to the purchase price, the company incurred $100 freight charges. The machine has an estimated useful life of 5 years and will require $125 for insurance over that period. Boone Company would record the cost of the machine at

Accepted Answer

A)  $5,000 
B)  $5,100 
C)  $5,125 
D)  $5,225 
A)  $5,000 
B)  $5,100 
C)  $5,125 
D)  $5,225

Question 16

When a franchisee purchases a franchise, the amount recorded in the books for the franchise asset would be equal to

Accepted Answer

A)  The value of the franchise 
B)  The total cost paid for the franchise 
C)  The cost paid for the franchise less expenses for equipment 
D)  None of these are correct 
A)  The value of the franchise 
B)  The total cost paid for the franchise 
C)  The cost paid for the franchise less expenses for equipment 
D)  None of these are correct

Question 17

In 2002, Yates Company purchased land and a building at a cost of $2,000,000, with $600,000 allocated to land and $1,400,000 to the building. On December 31, 2011, the accounting records showed the following:
  
During 2012, it is determined that the building is on the site of a toxic waste dump and the future cash flows associated with the land and building are less than the recorded total book value for these two assets. The fair value of the land and building is $200,000, of which $60,000 is land. Make any journal entries necessary to record the asset impairment.

Accepted Answer

During 2012, it is determined that the b

Question 18

Smolan Company purchased a new machine on September 1, 2011. It was expected to produce 200,000 units of product over its estimated useful life of eight years. Total cost of the machine was $900,000, and salvage value was estimated to be $90,000. Actual units produced by the machine in 2011 and 2012 are shown below:

Accepted Answer

The answer of Smolan Company purchased a new machine on...

Question 19

Shanahan Construction purchased a crane on January 1, 2010, for $102,750. At the time of purchase, the crane was estimated to have a life of 6 years and a residual value of $6,750. In 2012, Shanahan determined that the crane had a total useful life of 7 years and a residual value of $4,500. If Shanahan uses the straight-line method of depreciation, what will be the 2012 depreciation expense for the crane?

Accepted Answer

A)  $16,000 
B)  $13,250 
C)  $9,464 
D)  $8,000 
A)  $16,000 
B)  $13,250 
C)  $9,464 
D)  $8,000

Question 20

What is the gain or loss on the sale of an asset that originally cost $12,000, has accumulated depreciation of $5,000, and is sold for $6,000?

Accepted Answer

A)  $1,000 loss 
B)  $3,000 loss 
C)  $1,000 gain 
D)  $6,000 loss 
A)  $1,000 loss 
B)  $3,000 loss 
C)  $1,000 gain 
D)  $6,000 loss

Another name for residual value is

Long-term operating assets have value because they are expected to

In order to calculate periodic depreciation expense, which of the following need NOT be known about an asset?

In order to calculate the third year's depreciation on an asset using the sum-of-the-years'-digits method, which of the following must be known about the asset?

Which of the following is NOT a current asset?

To properly evaluate the purchase of a long-term asset, the expected future cash flows must be adjusted for

Luray Company purchased a new $40,000 truck on January 1, 2012. The truck was expected to last 4 years and have no salvage value. During 2013, Loray's depreciation expense on the truck was $12,000. Which of the following depreciation methods is Loray Company using to depreciate the truck?

Furniture with a list price of $6,000 is purchased on account for $5,000. Which of the following entries properly records this transaction?

If the estimate of an asset's useful life is changed, then

A machine is purchased on January 1, 2012, for $72,000 cash. The machine has an estimated useful life of 8 years and a salvage value of $17,200. If the double-declining-balance method of depreciation is used, what will be the machine's book value as of December 31, 2013?

The book value of an asset is the

Rexford Company purchased a machine on January 1, 2012, for $57,600 cash. The machine has an estimated useful life of 8 years and a salvage value of $15,040. Rexford uses the double-declining-balance method of depreciation for all its assets. What will be the depreciation expense for 2012?

When a franchisee purchases a franchise, the amount recorded in the books for the franchise asset would be equal to

What is the gain or loss on the sale of an asset that originally cost $12,000, has accumulated depreciation of $5,000, and is sold for $6,000?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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Exam 9: Investments: Property, Plant, and Equipment and Intangible Assets

Another name for residual value is

Long-term operating assets have value because they are expected to

In order to calculate periodic depreciation expense, which of the following need NOT be known about an asset?

In order to calculate the third year's depreciation on an asset using the sum-of-the-years'-digits method, which of the following must be known about the asset?

Which of the following is NOT a current asset?

To properly evaluate the purchase of a long-term asset, the expected future cash flows must be adjusted for

Luray Company purchased a new $40,000 truck on January 1, 2012. The truck was expected to last 4 years and have no salvage value. During 2013, Loray's depreciation expense on the truck was $12,000. Which of the following depreciation methods is Loray Company using to depreciate the truck?

Furniture with a list price of $6,000 is purchased on account for $5,000. Which of the following entries properly records this transaction?

If the estimate of an asset's useful life is changed, then

A machine is purchased on January 1, 2012, for $72,000 cash. The machine has an estimated useful life of 8 years and a salvage value of $17,200. If the double-declining-balance method of depreciation is used, what will be the machine's book value as of December 31, 2013?

The book value of an asset is the

Rexford Company purchased a machine on January 1, 2012, for $57,600 cash. The machine has an estimated useful life of 8 years and a salvage value of $15,040. Rexford uses the double-declining-balance method of depreciation for all its assets. What will be the depreciation expense for 2012?

When a franchisee purchases a franchise, the amount recorded in the books for the franchise asset would be equal to

What is the gain or loss on the sale of an asset that originally cost $12,000, has accumulated depreciation of $5,000, and is sold for $6,000?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters