Question 1

Small expenditures for what ordinarily are considered capital expenditures frequently are treated as revenue expenditures.

Accepted Answer

A) True 
 B)False

Question 2

The term used to describe the allocation of the cost of an intangible asset to the periods it benefits is

Accepted Answer

A) depletion. 
B) apportionment. 
C) amortization. 
D) depreciation. 
A) depletion. 
B) apportionment. 
C) amortization. 
D) depreciation.

Question 3

The entry to record the sale of equipment costing $40,000,with accumulated depreciation of $34,000 and sale price of $7,700,will include

Accepted Answer

A) a gain on sale of equipment of 1,700. 
B) a gain on sale of equipment of 7,700. 
C) a loss on sale of equipment of 32,300. 
D) a loss of sale of equipment of 26,300. 
A) a gain on sale of equipment of 1,700. 
B) a gain on sale of equipment of 7,700. 
C) a loss on sale of equipment of 32,300. 
D) a loss of sale of equipment of 26,300.

Question 4

Horshack Mining Company purchases a gravel pit for $5,000,000.It estimates that 10,000,000 tons of gravel can be extracted over the pit's useful life.If 2,000,000 tons are extracted during the first year but only 1,440,000 tons are sold,what amount should be recorded for Gravel Inventory and Depletion Expense,respectively?

Accepted Answer

A) $280,000 and 720,000 
B) $720,000 and $280,000 
C) $720,000 and 720,000 
D) $280,000 and $1,000,000 
A) $280,000 and 720,000 
B) $720,000 and $280,000 
C) $720,000 and 720,000 
D) $280,000 and $1,000,000

Question 5

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 6

A truck is purchased for $70,000.It has a five-year life and a $10,000 residual value.
-Under the straight-line method,what is the asset's carrying value after three years?

Accepted Answer

A) $24,000 
B) $34,000 
C) $36,000 
D) $46,000 
A) $24,000 
B) $34,000 
C) $36,000 
D) $46,000

Question 7

Failure to record depletion for a given accounting period will result in

Accepted Answer

A) understated total assets. 
B) understated total liabilities. 
C) overstated net income. 
D) overstated total liabilities. 
A) understated total assets. 
B) understated total liabilities. 
C) overstated net income. 
D) overstated total liabilities.

Question 8

Salvage value is not the same as

Accepted Answer

A) carrying value. 
B) residual value. 
C) disposal value. 
D) scrap value. 
A) carrying value. 
B) residual value. 
C) disposal value. 
D) scrap value.

Question 9

Gomez Company purchases a piece of equipment on Jan.2,2014,for $30,000.The equipment has an estimated life of eight years or 50,000 units of production and an estimated residual value of $3,000.Lester uses a calendar fiscal year.The entry to record the amount of depreciation for 2014.
-Using the straight-line method,is

Accepted Answer

A) debit to Depreciation Expense,3,750;credit to Cash,3,750 
B) debit to Depreciation Expense,3,375;credit to Accumulated Depreciation,3,375 
C) debit to Depreciation Expense,2,500;credit to Accumulated Depreciation,2,500 
D) debit to Accumulated Depreciation,2,250;credit to Cash,2,250 
A) debit to Depreciation Expense,3,750;credit to Cash,3,750 
B) debit to Depreciation Expense,3,375;credit to Accumulated Depreciation,3,375 
C) debit to Depreciation Expense,2,500;credit to Accumulated Depreciation,2,500 
D) debit to Accumulated Depreciation,2,250;credit to Cash,2,250

Question 10

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 3 under straight-line depreciation?

Accepted Answer

A) $4,500 
B) $3,600 
C) $10,800 
D) $13,500 
A) $4,500 
B) $3,600 
C) $10,800 
D) $13,500

Question 11

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.

Accepted Answer

A) True 
 B)False

Question 12

In accounting,depreciation means the decline in value of an asset.

Accepted Answer

A) True 
 B)False

Question 13

Management has considerable latitude in making judgments and estimates regarding portions of an asset's cost to expense and to retain on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 14

Under what circumstances will a loss be recorded on the sale of equipment,and what effect will the loss have on stockholders' equity?

Accepted Answer

A loss will be recorded when the proceed

Question 15

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.Assume that the truck was traded for a similar truck having a price of $13,000,that an $1,800 trade-in was allowed,and that the balance was paid in cash.The amount of the gain or loss recognized on this transaction would be

Accepted Answer

A) a $1,200 loss. 
B) a $1,200 gain. 
C) a $2,400 loss. 
D) no gain or loss recognized. 
A) a $1,200 loss. 
B) a $1,200 gain. 
C) a $2,400 loss. 
D) no gain or loss recognized.

Question 16

A patent has a legal life of 20 years.

Accepted Answer

A) True 
 B)False

Question 17

Leasehold improvements are not subject to any form of cost allocation.

Accepted Answer

A) True 
 B)False

Question 18

Under tax depreciation,estimated useful life and residual value must be strictly adhered to.

Accepted Answer

A) True 
 B)False

Question 19

The cost of repairing a machine damaged during installation should be charged as an operating expense.

Accepted Answer

A) True 
 B)False

Question 20

A copyright should be amortized over its legal life regardless of its expected useful life.

Accepted Answer

A) True 
 B)False

Exam 9: Long-Term Assets

Small expenditures for what ordinarily are considered capital expenditures frequently are treated as revenue expenditures.

The term used to describe the allocation of the cost of an intangible asset to the periods it benefits is

The entry to record the sale of equipment costing $40,000,with accumulated depreciation of $34,000 and sale price of $7,700,will include

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

A truck is purchased for $70,000.It has a five-year life and a $10,000 residual value. -Under the straight-line method,what is the asset's carrying value after three years?

Failure to record depletion for a given accounting period will result in

Salvage value is not the same as

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 3 under straight-line depreciation?

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.

In accounting,depreciation means the decline in value of an asset.

Management has considerable latitude in making judgments and estimates regarding portions of an asset's cost to expense and to retain on the balance sheet.

Under what circumstances will a loss be recorded on the sale of equipment,and what effect will the loss have on stockholders' equity?

A patent has a legal life of 20 years.

Leasehold improvements are not subject to any form of cost allocation.

Under tax depreciation,estimated useful life and residual value must be strictly adhered to.

The cost of repairing a machine damaged during installation should be charged as an operating expense.

A copyright should be amortized over its legal life regardless of its expected useful life.

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

Filters