Question 1

The primary difference between ordinary and extraordinary repairs is that extraordinary repairs

Accepted Answer

A) are an expense of the current period. 
B) are periodic in nature. 
C) are necessary to maintain the asset in good operational condition. 
D) extend the useful life or increase the residual value of the asset. 
A) are an expense of the current period. 
B) are periodic in nature. 
C) are necessary to maintain the asset in good operational condition. 
D) extend the useful life or increase the residual value of the asset.

Question 2

Land held for speculative purposes should be classified as a short-term investment.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Overestimating the number of tons of a mineral that can be mined over a mineral deposit's life will result in

Accepted Answer

A) understated total assets each year. 
B) understated net income each year. 
C) understated depletion expense each year. 
D) no effect on total assets each year. 
A) understated total assets each year. 
B) understated net income each year. 
C) understated depletion expense each year. 
D) no effect on total assets each year.

Question 5

All of the following are needed for the computation of depreciation except

Accepted Answer

A) residual value. 
B) estimated useful life. 
C) cost. 
D) current market value. 
A) residual value. 
B) estimated useful life. 
C) cost. 
D) current market value.

Question 6

If a company is facing negative free cash flow,it may issue stock in order to continue operating at its planned level.

Accepted Answer

A) True 
 B)False

Question 7

The federal government grants patents for

Accepted Answer

A) 10 years. 
B) 20 years. 
C) 40 years. 
D) the useful life of the patent. 
A) 10 years. 
B) 20 years. 
C) 40 years. 
D) the useful life of the patent.

Question 8

When a fully depreciated asset with a residual value is discarded

Accepted Answer

A) a loss equal to its residual value may be recognized. 
B) a gain equal to its residual value may be recognized. 
C) no gain or loss may be recognized. 
D) a gain for its carrying value may be recognized. 
A) a loss equal to its residual value may be recognized. 
B) a gain equal to its residual value may be recognized. 
C) no gain or loss may be recognized. 
D) a gain for its carrying value may be recognized.

Question 9

A machine that cost $13,000 and on which $9,300 of accumulated depreciation had been recorded was disposed of for $3,700.The entry to record the disposal of the machine is:

Accepted Answer

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

Question 10

A company purchases for $48,000 an asset that has a useful life of six years and no salvage value.After two years,the company spends $8,000 for a major overhaul that will extend the machine's useful life four years beyond the original six.Assuming straight-line depreciation,how much depreciation should be taken in year 3?

Accepted Answer

A) $4,000 
B) $5,000 
C) $5,600 
D) $8,000 
A) $4,000 
B) $5,000 
C) $5,600 
D) $8,000

Question 11

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 12

Which of the following most appropriately describes depreciation?

Accepted Answer

A) Decline in value of a plant asset 
B) Gradual allocation of the cost of a plant asset over periods of usefulness 
C) Physical deterioration of a plant asset 
D) Gradual obsolescence of a plant asset 
A) Decline in value of a plant asset 
B) Gradual allocation of the cost of a plant asset over periods of usefulness 
C) Physical deterioration of a plant asset 
D) Gradual obsolescence of a plant asset

Question 13

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 14

The golden globe used to identify the publisher of a textbook is an example of a

Accepted Answer

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

Question 15

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 16

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

Accepted Answer

A) $5,000. 
B) $12,500. 
C) $17,500. 
D) impossible to determine from the facts given. 
A) $5,000. 
B) $12,500. 
C) $17,500. 
D) impossible to determine from the facts given.

Question 17

Normally,depreciation calculations are based on the exact number of days the asset is held during the period.

Accepted Answer

A) True 
 B)False

Question 18

Additions and betterments are examples of capital expenditures.

Accepted Answer

A) True 
 B)False

Question 19

When disposing of equipment,Accumulated Depreciation is debited for the existing carrying value.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 10: Long -Term Assets

The primary difference between ordinary and extraordinary repairs is that extraordinary repairs

Land held for speculative purposes should be classified as a short-term investment.

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

Overestimating the number of tons of a mineral that can be mined over a mineral deposit's life will result in

All of the following are needed for the computation of depreciation except

If a company is facing negative free cash flow,it may issue stock in order to continue operating at its planned level.

The federal government grants patents for

When a fully depreciated asset with a residual value is discarded

A machine that cost $13,000 and on which $9,300 of accumulated depreciation had been recorded was disposed of for $3,700.The entry to record the disposal of the machine is:

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

Which of the following most appropriately describes depreciation?

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

The golden globe used to identify the publisher of a textbook is an example of a

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

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

Normally,depreciation calculations are based on the exact number of days the asset is held during the period.

Additions and betterments are examples of capital expenditures.

When disposing of equipment,Accumulated Depreciation is debited for the existing carrying value.

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

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

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