Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Licenses are properly classified as intangible assets.

Accepted Answer

A) True 
 B)False

Question 3

Prior to the sale of an asset,depreciation should be updated and recorded.

Accepted Answer

A) True 
 B)False

Question 4

Extraordinary repairs usually are recorded by making a debit to

Accepted Answer

A) a capital account. 
B) Repair Expense. 
C) a contra-asset account. 
D) an asset account. 
A) a capital account. 
B) Repair Expense. 
C) a contra-asset account. 
D) an asset account.

Question 5

Which of the following is not subject to depletion?

Accepted Answer

A) Timber tract 
B) Noncompete covenant 
C) Mine 
D) Oil field 
A) Timber tract 
B) Noncompete covenant 
C) Mine 
D) Oil field

Question 6

Goodwill represents the excess paid for a business over the fair value of its net assets.

Accepted Answer

A) True 
 B)False

Question 7

A patent has a legal life of 20 years.

Accepted Answer

A) True 
 B)False

Question 8

The cost of equipment would include the cost of test runs to see that the equipment is operating properly.

Accepted Answer

A) True 
 B)False

Question 9

The construction of a new wing on an existing building is described as a(n)

Accepted Answer

A) addition. 
B) extraordinary repair. 
C) revenue expenditure. 
D) betterment. 
A) addition. 
B) extraordinary repair. 
C) revenue expenditure. 
D) betterment.

Question 10

If an asset costs $41,000,has a residual value of $3,000,and has a useful life of five years,the entry to record depreciation in the second year,using the double-declining-balance method,is

Accepted Answer

A) debit to Depreciation Expense,9,430;credit to Cash,9,430. 
B) debit to Depreciation Expense,9,840;credit to Accumulated Depreciation,9,840 
C) debit to Depreciation Expense,10,250;credit to Accumulated Depreciation,10,250 
D) debit to Accumulated Depreciation,10,660;credit to Depreciation Expense,10,660 
A) debit to Depreciation Expense,9,430;credit to Cash,9,430. 
B) debit to Depreciation Expense,9,840;credit to Accumulated Depreciation,9,840 
C) debit to Depreciation Expense,10,250;credit to Accumulated Depreciation,10,250 
D) debit to Accumulated Depreciation,10,660;credit to Depreciation Expense,10,660

Question 11

Inventory is classified as a long-term asset.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is not true about depreciation for tax purposes?

Accepted Answer

A) The straight-line method is used for most assets. 
B) The same methods are not acceptable for financial reporting. 
C) Plant assets are written off rapidly. 
D) There is a bonus first-year deduction. 
A) The straight-line method is used for most assets. 
B) The same methods are not acceptable for financial reporting. 
C) Plant assets are written off rapidly. 
D) There is a bonus first-year deduction.

Question 13

A leasehold is a payment

Accepted Answer

A) for the right to use certain property. 
B) for the right to sublease certain property. 
C) to give up or to get out of a lease. 
D) to improve leased property. 
A) for the right to use certain property. 
B) for the right to sublease certain property. 
C) to give up or to get out of a lease. 
D) to improve leased property.

Question 14

The cost of a sewage system should be included in the Land Improvements account.

Accepted Answer

A) True 
 B)False

Question 15

What is goodwill and when may it be recorded?

Accepted Answer

Goodwill represents the excess

Question 16

The unexpired cost of a plant asset is referred to as its

Accepted Answer

A) depreciable cost. 
B) carrying value. 
C) accumulated depreciation. 
D) original cost. 
A) depreciable cost. 
B) carrying value. 
C) accumulated depreciation. 
D) original cost.

Question 17

Justin,Inc.purchased equipment for $100,000.The equipment had an estimated useful life of eight years and an estimated residual value of $12,000.After five years of use,the estimated residual value is changed to $18,000.Assuming straight-line depreciation,depreciation expense in year 6 would be

Accepted Answer

A) $9,000. 
B) $10,250 
C) $11,000. 
D) $15,000. 
A) $9,000. 
B) $10,250 
C) $11,000. 
D) $15,000.

Question 18

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 19

Which of the following depreciation methods is the most logical for a machine that produces discrete (i.e. ,separate)units?

Accepted Answer

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

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 10: Long -Term Assets

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

Licenses are properly classified as intangible assets.

Prior to the sale of an asset,depreciation should be updated and recorded.

Extraordinary repairs usually are recorded by making a debit to

Which of the following is not subject to depletion?

Goodwill represents the excess paid for a business over the fair value of its net assets.

A patent has a legal life of 20 years.

The cost of equipment would include the cost of test runs to see that the equipment is operating properly.

The construction of a new wing on an existing building is described as a(n)

If an asset costs $41,000,has a residual value of $3,000,and has a useful life of five years,the entry to record depreciation in the second year,using the double-declining-balance method,is

Inventory is classified as a long-term asset.

Which of the following statements is not true about depreciation for tax purposes?

A leasehold is a payment

The cost of a sewage system should be included in the Land Improvements account.

What is goodwill and when may it be recorded?

The unexpired cost of a plant asset is referred to as its

Justin,Inc.purchased equipment for $100,000.The equipment had an estimated useful life of eight years and an estimated residual value of $12,000.After five years of use,the estimated residual value is changed to $18,000.Assuming straight-line depreciation,depreciation expense in year 6 would be

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

Which of the following depreciation methods is the most logical for a machine that produces discrete (i.e. ,separate)units?

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

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

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

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

Filters