Question 1

All intangible assets must be amortized each year.

Accepted Answer

A) True 
 B)False

Question 2

During 2018,Landers Company had net sales of $17,700,000.The beginning total assets were $10,000,000.The asset turnover ratio was 1.5 times.Calculate the ending total assets of Landers.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

A)  $13,600,000 
B)  $10,000,000 
C)  $15,900,000 
D)  $5,900,000 
A)  $13,600,000 
B)  $10,000,000 
C)  $15,900,000 
D)  $5,900,000

Question 3

A company's accountant capitalized a payment that should have been recorded as a revenue expenditure.How will this error affect the company's financial statements?

Accepted Answer

A)  Net income will be overstated. 
B)  Revenues will be understated. 
C)  Assets will be understated. 
D)  Liabilities will be understated. 
A)  Net income will be overstated. 
B)  Revenues will be understated. 
C)  Assets will be understated. 
D)  Liabilities will be understated.

Question 4

A patent is an exclusive right to reproduce and sell a book,musical composition,film,other work of art,or intellectual property.

Accepted Answer

A) True 
 B)False

Question 5

Prepare the journal entry to record the acquisition of fences and signs for $5,000 cash.Omit explanation.

Accepted Answer

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Question 6

Which of the following represents a privilege granted by a government to use public property in performing services?

Accepted Answer

A)  goodwill 
B)  license 
C)  franchise 
D)  trademark 
A)  goodwill 
B)  license 
C)  franchise 
D)  trademark

Question 7

The cost of an asset is $1,110,000,and its residual value is $110,000.Estimated useful life of the asset is eight years.Calculate depreciation for the second year using the double-declining-balance method of depreciation.(Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Accepted Answer

A)  $138,750 
B)  $125,000 
C)  $250,000 
D)  $208,125 
A)  $138,750 
B)  $125,000 
C)  $250,000 
D)  $208,125

Question 8

Intangibles with an indefinite life are tested for impairment annually.

Accepted Answer

A) True 
 B)False

Question 9

On January 1,2018,Sport Planes Manufacturing Company purchased a machine for $40,000,000.The company expects to use the machine for 24,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $40,000.The company used the machine for 3,600 hours in 2018 and 5,000 hours in 2019.What is the book value of the machine at the end of year 2019 if the company uses double-declining-balance method of depreciation? (Round your intermediate calculations.)

Accepted Answer

Double-declining-balance depreciation =

Question 10

Brandy Enterprises discarded a computer that was fully depreciated and had no residual value.As a result of this transaction,Brandy will ________.

Accepted Answer

A)  report a loss equal to the historical cost of the computer 
B)  Debit the Computer account and credit the Accumulated Depreciation - Computer account 
C)  Debit the Accumulated Depreciation - Computer account; debit Loss on Disposal of Computer account, and credit the Computer account 
D)  zero out the Computer and Accumulated Depreciation - Computer accounts 
A)  report a loss equal to the historical cost of the computer 
B)  Debit the Computer account and credit the Accumulated Depreciation - Computer account 
C)  Debit the Accumulated Depreciation - Computer account; debit Loss on Disposal of Computer account, and credit the Computer account 
D)  zero out the Computer and Accumulated Depreciation - Computer accounts

Question 11

Which of the following is NOT recorded as the cost of a building?

Accepted Answer

A)  building permits 
B)  fencing 
C)  architectural fees 
D)  contractor charges 
A)  building permits 
B)  fencing 
C)  architectural fees 
D)  contractor charges

Question 12

The asset turnover ratio measures ________.

Accepted Answer

A)  how efficiently a business uses its sales to finance the assets 
B)  how efficiently a business uses its average total assets to generate sales 
C)  how efficiently a business uses its net profit to finance the assets 
D)  how the ending inventory helps increase the value of assets 
A)  how efficiently a business uses its sales to finance the assets 
B)  how efficiently a business uses its average total assets to generate sales 
C)  how efficiently a business uses its net profit to finance the assets 
D)  how the ending inventory helps increase the value of assets

Question 13

The cost of a building depends on whether the company is constructing the building or is acquiring an existing one.

Accepted Answer

A) True 
 B)False

Question 14

Cameron Company purchased a mine on January 1,2018,for $533,000,which is estimated to contain 30,000 tons of iron ore.There is no residual value.The business extracted and sold 13,500 tons of ore in 2018 and 13,800 tons of ore in 2019.What is the depletion expense for 2019?(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

A)  $239,895 
B)  $485,121 
C)  $245,226 
D)  $47,979 
A)  $239,895 
B)  $485,121 
C)  $245,226 
D)  $47,979

Question 15

Equipment was purchased for $24,000 on January 1,2018.The equipment's estimated useful life was five years,and its residual value was $4,000.The straight-line method of depreciation was used.Calculate the gain or loss on sale if the equipment is sold for $18,000 on December 31,2018,the end of the accounting period.Prepare the journal entry to record the sale of equipment.Omit explanation.

Accepted Answer

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Question 16

After a machine is installed and is up and running,repairs and maintenance are recorded as part of the cost of the machine.

Accepted Answer

A) True 
 B)False

Question 17

Estimated residual value is not depreciated because the company is guaranteed to receive this amount when the asset is sold.

Accepted Answer

A) True 
 B)False

Question 18

Intangible assets ________.

Accepted Answer

A)  represent assets for which the market value cannot be determined 
B)  are not recorded in the books because they have no physical substance 
C)  convey special rights from patents, copyrights, trademarks, and other creative works 
D)  All of the statements are correct. 
A)  represent assets for which the market value cannot be determined 
B)  are not recorded in the books because they have no physical substance 
C)  convey special rights from patents, copyrights, trademarks, and other creative works 
D)  All of the statements are correct.

Question 19

When a plant asset is sold for less than its book value,a gain is recorded.

Accepted Answer

A) True 
 B)False

Question 20

Tulip Company purchased equipment for $58,000 on January 1,2017.On December 31,2019,the equipment was sold for $23,000.Accumulated Depreciation as of December 31,2019 was $32,000. Calculate gain or loss on the sale.

Accepted Answer

A)  $3000 gain 
B)  $3000 loss 
C)  $32,000 loss 
D)  no gain no loss 
A)  $3000 gain 
B)  $3000 loss 
C)  $32,000 loss 
D)  no gain no loss

Exam 10: Plant Assets,natural Resources,and Intangibles

All intangible assets must be amortized each year.

During 2018,Landers Company had net sales of $17,700,000.The beginning total assets were $10,000,000.The asset turnover ratio was 1.5 times.Calculate the ending total assets of Landers.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

A company's accountant capitalized a payment that should have been recorded as a revenue expenditure.How will this error affect the company's financial statements?

A patent is an exclusive right to reproduce and sell a book,musical composition,film,other work of art,or intellectual property.

Prepare the journal entry to record the acquisition of fences and signs for $5,000 cash.Omit explanation.

Which of the following represents a privilege granted by a government to use public property in performing services?

Intangibles with an indefinite life are tested for impairment annually.

Brandy Enterprises discarded a computer that was fully depreciated and had no residual value.As a result of this transaction,Brandy will ________.

Which of the following is NOT recorded as the cost of a building?

The asset turnover ratio measures ________.

The cost of a building depends on whether the company is constructing the building or is acquiring an existing one.

After a machine is installed and is up and running,repairs and maintenance are recorded as part of the cost of the machine.

Estimated residual value is not depreciated because the company is guaranteed to receive this amount when the asset is sold.

Intangible assets ________.

When a plant asset is sold for less than its book value,a gain is recorded.

Tulip Company purchased equipment for $58,000 on January 1,2017.On December 31,2019,the equipment was sold for $23,000.Accumulated Depreciation as of December 31,2019 was $32,000. Calculate gain or loss on the sale.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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