Question 1

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

Accepted Answer

A) True 
 B)False

Question 2

A total asset turnover ratio of 3.5 indicates that:

Accepted Answer

A) For every $1 in sales,the firm acquired $3.50 in assets during the period. 
B) For every $1 in assets,the firm produced $3.50 in net sales during the period. 
C) For every $1 in assets,the firm earned gross profit of $3.50 during the period. 
D) For every $1 in assets,the firm earned $3.50 in net income. 
E) For every $1 in assets,the firm paid $3.50 in expenses during the period. 
A) For every $1 in sales,the firm acquired $3.50 in assets during the period. 
B) For every $1 in assets,the firm produced $3.50 in net sales during the period. 
C) For every $1 in assets,the firm earned gross profit of $3.50 during the period. 
D) For every $1 in assets,the firm earned $3.50 in net income. 
E) For every $1 in assets,the firm paid $3.50 in expenses during the period.

Question 3

Another name for a capital expenditure is:

Accepted Answer

A) Revenue expenditure. 
B) Asset expenditure. 
C) Long-term expenditure. 
D) Contributed capital expenditure. 
E) Balance sheet expenditure. 
A) Revenue expenditure. 
B) Asset expenditure. 
C) Long-term expenditure. 
D) Contributed capital expenditure. 
E) Balance sheet expenditure.

Question 4

A company purchased equipment on June 28 of the current year and placed it in service on August 1.The following costs were incurred in acquiring the equipment:
   Determine the amount to be recorded as cost for the equipment.

Accepted Answer

The answer of A company purchased equipment on June 28...

Question 5

Betterments are:

Accepted Answer

A) Expenditures making a plant asset more efficient or productive. 
B) Also called ordinary repairs. 
C) Always increase an asset's life. 
D) Revenue expenditures. 
E) Credited against the asset account when incurred. 
A) Expenditures making a plant asset more efficient or productive. 
B) Also called ordinary repairs. 
C) Always increase an asset's life. 
D) Revenue expenditures. 
E) Credited against the asset account when incurred.

Question 6

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.The machine's useful life is estimated to be 5 years,or 300,000 units of product,with a $15,000 salvage value.During its first year,the machine produces 64,500 units of product.
-Determine the machines' first year depreciation under the straight-line method.

Accepted Answer

A) $27,000. 
B) $29,025. 
C) $25,800. 
D) $23,779. 
E) $24,000. 
A) $27,000. 
B) $29,025. 
C) $25,800. 
D) $23,779. 
E) $24,000.

Question 7

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000.The machine's useful life is estimated to be 5 years,or 400,000 units of product,with a $7,000 salvage value.During its second year,the machine produces 84,500 units of product.
-Determine the machines' second year depreciation under the double-declining-balance method.

Accepted Answer

A) $16,900. 
B) $16,000. 
C) $17,400. 
D) $18,379. 
E) $20,880. 
A) $16,900. 
B) $16,000. 
C) $17,400. 
D) $18,379. 
E) $20,880.

Question 8

A change in an accounting estimate is:

Accepted Answer

A) Reflected in past financial statements. 
B) Reflected in future financial statements and also requires modification of past statements. 
C) Reflected in current and future years' financial statements,not in prior statements. 
D) Not allowed under current accounting rules. 
E) Considered an error in the financial statements. 
A) Reflected in past financial statements. 
B) Reflected in future financial statements and also requires modification of past statements. 
C) Reflected in current and future years' financial statements,not in prior statements. 
D) Not allowed under current accounting rules. 
E) Considered an error in the financial statements.

Question 9

Total asset turnover is calculated by dividing net sales by average total assets.

Accepted Answer

A) True 
 B)False

Question 10

The total cost of an asset less its accumulated depreciation is called:

Accepted Answer

A) Historical cost. 
B) Book value. 
C) Present value. 
D) Current (market)value. 
E) Replacement cost. 
A) Historical cost. 
B) Book value. 
C) Present value. 
D) Current (market)value. 
E) Replacement cost.

Question 11

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the straight-line method.
-The machine's useful life is estimated to be 5 years with a $4,000 salvage value.The book value of the machine at the end of year 2 is:

Accepted Answer

A) $4,000. 
B) $8,000. 
C) $12,000. 
D) $16,000. 
E) $20,000. 
A) $4,000. 
B) $8,000. 
C) $12,000. 
D) $16,000. 
E) $20,000.

Question 12

A leasehold is:

Accepted Answer

A) A short-term rental agreement. 
B) The same as a patent. 
C) The rights granted to the lessee by the lessor of a lease. 
D) Recorded as revenue expenditure when paid. 
E) An asset held as an investment. 
A) A short-term rental agreement. 
B) The same as a patent. 
C) The rights granted to the lessee by the lessor of a lease. 
D) Recorded as revenue expenditure when paid. 
E) An asset held as an investment.

Question 13

Depreciation expense is calculated using its cost,estimates of an asset's salvage value,and an estimated useful life.

Accepted Answer

A) True 
 B)False

Question 14

Obsolescence refers to plant assets that typically have longer useful lives and higher salvage values.

Accepted Answer

A) True 
 B)False

Question 15

A company exchanged its used machine for a new machine in a transaction that had commercial substance.The old machine cost $68,000,and the new one had a cash price of $95,000.The company had taken $59,000 depreciation on the old machine and was allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash.What gain or loss should be recorded on the exchange?

Accepted Answer

The answer of A company exchanged its used machine for...

Question 16

The depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a(an):

Accepted Answer

A) Accelerated depreciation method. 
B) Book value depreciation method. 
C) Straight-line depreciation method. 
D) Units-of-production depreciation method. 
E) Unrealized depreciation method. 
A) Accelerated depreciation method. 
B) Book value depreciation method. 
C) Straight-line depreciation method. 
D) Units-of-production depreciation method. 
E) Unrealized depreciation method.

Question 17

On July 1 of the current year,Timberlake Company signed a contract to lease space in a building for 7 years.After taking possession of the leased space,Timberlake pays $140,000 for improving the office portion of the lease space.The improvements are paid on July 2 of the current year,and are estimated to have a useful life equal to 13 years.Prepare entries for Timberlake to record (a)its payment for the office improvements,(b)the December 31 year-end entry to amortize the office improvements.

Accepted Answer

The answer of On July 1 of the current year,Timberlake...

Question 18

Revenue expenditures are also called balance sheet expenditures.

Accepted Answer

A) True 
 B)False

Exam 8: Accounting for Long-Term Assets

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

A total asset turnover ratio of 3.5 indicates that:

Another name for a capital expenditure is:

A company purchased equipment on June 28 of the current year and placed it in service on August 1.The following costs were incurred in acquiring the equipment: Determine the amount to be recorded as cost for the equipment.

Betterments are:

A change in an accounting estimate is:

Total asset turnover is calculated by dividing net sales by average total assets.

The total cost of an asset less its accumulated depreciation is called:

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the straight-line method. -The machine's useful life is estimated to be 5 years with a $4,000 salvage value.The book value of the machine at the end of year 2 is:

A leasehold is:

Depreciation expense is calculated using its cost,estimates of an asset's salvage value,and an estimated useful life.

Obsolescence refers to plant assets that typically have longer useful lives and higher salvage values.

The depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a(an):

Revenue expenditures are also called balance sheet expenditures.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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