Question 1

An expenditure to lengthen the useful life of a company vehicle would require a

Accepted Answer

A)  credit to Company Vehicles. 
B)  debit to Cash. 
C)  debit to Depreciation Expense. 
D)  debit to Accumulated Depreciation. 
A)  credit to Company Vehicles. 
B)  debit to Cash. 
C)  debit to Depreciation Expense. 
D)  debit to Accumulated Depreciation.

Question 2

A symbol or name used to identify a product or service is called a

Accepted Answer

A)  copyright. 
B)  patent. 
C)  trademark. 
D)  license. 
A)  copyright. 
B)  patent. 
C)  trademark. 
D)  license.

Question 3

Equipment is purchased for $120,000. It has a five-year useful life and a $20,000 residual value. Under the double-declining-balance method, what is the depreciation expense for year 3?

Accepted Answer

A)  $17,280 
B)  $15,360 
C)  $14,400 
D)  $12,800 
A)  $17,280 
B)  $15,360 
C)  $14,400 
D)  $12,800

Question 4

On January 1, 2008, North Side Manufacturing Company purchased for $40,000 a machine that will produce an estimated 75,000 units of Product X. The machine has an estimated useful life of four years and an estimated residual value of $8,000. Calculate the following amounts, rounding answers to the nearest dollar: (a) the carrying value of the machine after it has been used for three and one-half years, under the straight-line method; (b) depreciation expense for 2010, under the production method (assume that 13,000 units were produced that year); and (c) accumulated depreciation at the end of 2009, under the double-declining-balance method. (Show your work.)

Accepted Answer

a. $12,000 ($40,000 - $8,000 = $32,000 ÷

Question 5

The exclusive right to use an identifying symbol is called a patent.

Accepted Answer

A) True 
 B)False

Question 6

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset.

Accepted Answer

A) True 
 B)False

Question 7

A truck is purchased for $35,000. It has a five-year life and a $5,000 residual value. Under the straight-line method, what is the asset's carrying value after three years?

Accepted Answer

A)  $23,000 
B)  $17,000 
C)  $12,000 
D)  $18,000 
A)  $23,000 
B)  $17,000 
C)  $12,000 
D)  $18,000

Question 8

Mineral deposits are subject to a process called amortization.

Accepted Answer

A) True 
 B)False

Question 9

Present two arguments in favor of the use of accelerated depreciation.

Accepted Answer

First, assets tend to be more productive

Question 10

Typically, depreciation calculations are rounded to the nearest whole month.

Accepted Answer

A) True 
 B)False

Question 11

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1. If the truck was discarded as having no value, the entry to record this event is

Accepted Answer

The answer of A truck that cost $12,000 and on...

Question 12

If a revenue expenditure is incorrectly recorded on a company's books as a capital expenditure, which of the following statements will be true?

Accepted Answer

A)  Stockholders' equity will be overstated at year end. 
B)  Net income in the following year will be unaffected. 
C)  Total assets will be understated at year end. 
D)  Net income will be understated for the year. 
A)  Stockholders' equity will be overstated at year end. 
B)  Net income in the following year will be unaffected. 
C)  Total assets will be understated at year end. 
D)  Net income will be understated for the year.

Question 13

The cost of a natural resource is expensed in the year during which the resource is

Accepted Answer

A)  purchased. 
B)  extracted. 
C)  paid for. 
D)  sold. 
A)  purchased. 
B)  extracted. 
C)  paid for. 
D)  sold.

Question 14

The cost of land would include the cost of a building purchased with the land and torn down because it was not needed.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true about the full-costing method?

Accepted Answer

A)  The cost of a dry well would be written off immediately as a loss. 
B)  All costs are recorded as assets, and then depleted over the resource's useful life. 
C)  All costs are written off immediately as a loss. 
D)  All costs are recorded as assets, but remain on the books as assets. 
A)  The cost of a dry well would be written off immediately as a loss. 
B)  All costs are recorded as assets, and then depleted over the resource's useful life. 
C)  All costs are written off immediately as a loss. 
D)  All costs are recorded as assets, but remain on the books as assets.

Question 16

Which of the following would be considered a capital expenditure?

Accepted Answer

A)  A truck tune-up 
B)  Machine maintenance 
C)  Installation of a solar heating system 
D)  Painting a room 
A)  A truck tune-up 
B)  Machine maintenance 
C)  Installation of a solar heating system 
D)  Painting a room

Question 17

Licenses are properly classified as intangible assets.

Accepted Answer

A) True 
 B)False

Question 18

According to generally accepted accounting principles, most expenditures for intangible assets acquired from others should be treated as revenue expenditures when incurred.

Accepted Answer

A) True 
 B)False

Question 19

Under the successful efforts method, the costs of both successful and unsuccessful exploration for oil and gas are recorded as assets.

Accepted Answer

A) True 
 B)False

Question 20

Indicate whether each of the following assets is subject to depreciation (D), depletion (DL), amortization (A), or none of these (X).

Accepted Answer

The answer of Indicate whether each of the following assets...

Exam 11: Long Term Assets

An expenditure to lengthen the useful life of a company vehicle would require a

A symbol or name used to identify a product or service is called a

Equipment is purchased for $120,000. It has a five-year useful life and a $20,000 residual value. Under the double-declining-balance method, what is the depreciation expense for year 3?

The exclusive right to use an identifying symbol is called a patent.

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset.

A truck is purchased for $35,000. It has a five-year life and a $5,000 residual value. Under the straight-line method, what is the asset's carrying value after three years?

Mineral deposits are subject to a process called amortization.

Present two arguments in favor of the use of accelerated depreciation.

Typically, depreciation calculations are rounded to the nearest whole month.

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1. If the truck was discarded as having no value, the entry to record this event is

If a revenue expenditure is incorrectly recorded on a company's books as a capital expenditure, which of the following statements will be true?

The cost of a natural resource is expensed in the year during which the resource is

The cost of land would include the cost of a building purchased with the land and torn down because it was not needed.

Which of the following statements is true about the full-costing method?

Which of the following would be considered a capital expenditure?

Licenses are properly classified as intangible assets.

According to generally accepted accounting principles, most expenditures for intangible assets acquired from others should be treated as revenue expenditures when incurred.

Under the successful efforts method, the costs of both successful and unsuccessful exploration for oil and gas are recorded as assets.

Indicate whether each of the following assets is subject to depreciation (D), depletion (DL), amortization (A), or none of these (X).

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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