Question 1

Residual value is relevant when calculating double-declining-balance depreciation.

Accepted Answer

A) True 
 B)False  True

Question 2

Gain on Sale of Machinery is recorded as a debit.

Accepted Answer

A) True 
 B)False  False

Question 3

Depreciation should not be recorded for an asset that is increasing in value.

Accepted Answer

A) True 
 B)False  False

Question 4

Mineral deposits are subject to a process called depletion.

Accepted Answer

A) True 
 B)False

Question 5

According to generally accepted accounting principles,the proper accounting treatment of the cost of developing intangible assets is to

Accepted Answer

A) carry the cost as an asset indefinitely. 
B) amortize the cost over five years. 
C) amortize the cost over a reasonable life. 
D) write off the cost immediately. 
A) carry the cost as an asset indefinitely. 
B) amortize the cost over five years. 
C) amortize the cost over a reasonable life. 
D) write off the cost immediately.

Question 6

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

Accepted Answer

A) True 
 B)False

Question 7

The following machines were purchased during 2014:
Machine A for $6,000 on April 5
Machine B for $4,000 on August 24
Machine C for $5,000 on November 10
Assuming that each machine has an estimated useful life of six years and a 10 percent residual value,calculate total depreciation expense for 2014 (assume straight-line depreciation and round to the nearest month and the company reports on a calendar-year basis).

Accepted Answer

The answer of The following machines were purchased during 2014:
Machine...

Question 8

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 and 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 and remain on the books as assets.

Question 9

A positive free cash flow means that a company has funds available to reduce debt or expand operations.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following methods ignores residual value initially but eventually considers it in the calculation of depreciation?

Accepted Answer

A) Straight-line 
B) Double-declining-balance 
C) Group 
D) Production 
A) Straight-line 
B) Double-declining-balance 
C) Group 
D) Production

Question 11

Additions and betterments are examples of capital expenditures.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Inventory is classified as a long-term asset.

Accepted Answer

A) True 
 B)False

Question 14

On January 1,a machine with a useful life of five years and a residual value of $4,500 is purchased for $22,500.What is the depreciation expense in year 2 using the double-declining-balance method?

Accepted Answer

A) $5,400 
B) $7,200 
C) $6,120 
D) $13,500 
A) $5,400 
B) $7,200 
C) $6,120 
D) $13,500

Question 15

If a company's free cash flow is $90,000,net cash flows from operating activities total $220,000,purchases of plant assets total $100,000,and sales of plant assets total zero,what amount is committed to dividends?

Accepted Answer

A) $20,000 
B) $30,000 
C) $60,000 
D) Impossible to determine from the facts given. 
A) $20,000 
B) $30,000 
C) $60,000 
D) Impossible to determine from the facts given.

Question 16

A revenue expenditure results in the recognition of an asset.

Accepted Answer

A) True 
 B)False

Question 17

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

Accepted Answer

In the year of purchase,both net income

Question 18

Estimated useful life and legal life are synonymous terms when dealing with intangible assets.

Accepted Answer

A) True 
 B)False

Question 19

Oswald purchased land for $48,000 and paid an additional $2,000 to install parking space.The entry to record the payment for the parking space is:

Accepted Answer

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

Question 20

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

Accepted Answer

A) is incurred subsequent to asset use. 
B) exceeds a certain dollar amount. 
C) is incurred prior to asset use. 
D) will expire in less than one year. 
A) is incurred subsequent to asset use. 
B) exceeds a certain dollar amount. 
C) is incurred prior to asset use. 
D) will expire in less than one year.

Exam 9: Long-Term Assets

Residual value is relevant when calculating double-declining-balance depreciation.

Gain on Sale of Machinery is recorded as a debit.

Depreciation should not be recorded for an asset that is increasing in value.

Mineral deposits are subject to a process called depletion.

According to generally accepted accounting principles,the proper accounting treatment of the cost of developing intangible assets is to

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

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

A positive free cash flow means that a company has funds available to reduce debt or expand operations.

Which of the following methods ignores residual value initially but eventually considers it in the calculation of depreciation?

Additions and betterments are examples of capital expenditures.

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

Inventory is classified as a long-term asset.

On January 1,a machine with a useful life of five years and a residual value of $4,500 is purchased for $22,500.What is the depreciation expense in year 2 using the double-declining-balance method?

If a company's free cash flow is $90,000,net cash flows from operating activities total $220,000,purchases of plant assets total $100,000,and sales of plant assets total zero,what amount is committed to dividends?

A revenue expenditure results in the recognition of an asset.

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

Estimated useful life and legal life are synonymous terms when dealing with intangible assets.

Oswald purchased land for $48,000 and paid an additional $2,000 to install parking space.The entry to record the payment for the parking space is:

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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