Question 1

Revenue expenditures are recorded as:

Accepted Answer

A) An expense. 
B) An asset. 
C) A liability. 
D) Income. 
A) An expense. 
B) An asset. 
C) A liability. 
D) Income.

Question 2

Mayer Instrumentation sold a depreciable asset for cash of $300,000.The original cost of the asset was $1,200,000.Mayer recognized a gain of $45,000 on the sale.What was the amount of accumulated depreciation on the asset at the time of its sale?

Accepted Answer

A) $945,000. 
B) $255,000. 
C) $1,155,000. 
D) $990,000. 
A) $945,000. 
B) $255,000. 
C) $1,155,000. 
D) $990,000.

Question 3

Sum-of-the-years' digits is a decelerated method of depreciation which produces less depreciation expense in the early years of the asset's life and more expense in the later years.

Accepted Answer

A) True 
 B)False

Question 4

Harvard Company purchased equipment having an invoice price of $11,500.The terms of sale were 2/10,n/30,and Harvard paid within the discount period.In addition,Harvard paid a $160 delivery charge,$185 installation charge,and $931 sales tax.The amount recorded as the cost of this equipment is:

Accepted Answer

A) $11,845. 
B) $12,776. 
C) $11,615. 
D) $12,546. 
A) $11,845. 
B) $12,776. 
C) $11,615. 
D) $12,546.

Question 5

Intangible assets are assets used in business operations but which:

Accepted Answer

A) Lack physical substance. 
B) Cannot be sold. 
C) Have been depreciated below their estimated salvage values. 
D) Cannot be specifically identified. 
A) Lack physical substance. 
B) Cannot be sold. 
C) Have been depreciated below their estimated salvage values. 
D) Cannot be specifically identified.

Question 6

To capitalize an expenditure means charging it to an asset account.

Accepted Answer

A) True 
 B)False

Question 7

A coal mine is regarded as an underground inventory of coal and is recorded as a current asset,Underground Coal Inventory,in the balance sheet.

Accepted Answer

A) True 
 B)False

Question 8

Sum-of-the-years' digits is a popular depreciation method for small businesses due to its simplicity.

Accepted Answer

A) True 
 B)False

Question 9

Physical deterioration refers to the process of an asset becoming outdated as a result of the availability of improved, more efficient assets.

Accepted Answer

A) True 
 B)False

Question 10

An asset which costs $97,600 and has accumulated depreciation of $82,000 is sold for $18,000.What amount of gain or loss will be recognized when the asset is sold?

Accepted Answer

A) A gain of $15,600. 
B) A loss of $15,600. 
C) A loss of $2,400. 
D) A gain of $2,400. 
A) A gain of $15,600. 
B) A loss of $15,600. 
C) A loss of $2,400. 
D) A gain of $2,400.

Question 11

In the early years of an asset's life,an accelerated depreciation method results in a more conservative balance sheet amount for the asset and a more conservative net income amount.

Accepted Answer

A) True 
 B)False

Question 12

Material gains and losses from the disposal of plant and equipment are shown on the income statement as part of income from operations.

Accepted Answer

A) True 
 B)False

Question 13

Wilbur Company purchased $10,000 of equipment on December 20,2015 on terms 2/15,net 30.Wilbur paid for the equipment on the 15th day following purchase and took advantage of the discount.Which of the following statements is correct?

Accepted Answer

A) Wilbur will record a cash outflow from operating activities of $10,000 in its 2015 financial statements. 
B) Wilbur will record a cash outflow from operating activities of $9,800 in its 2015 financial statements. 
C) Wilbur will record a cash outflow from operating activities of $10,000 in its 2016 financial statements. 
D) Wilbur will record a cash outflow from operating activities of $9,800 in its 2016 financial statements. 
A) Wilbur will record a cash outflow from operating activities of $10,000 in its 2015 financial statements. 
B) Wilbur will record a cash outflow from operating activities of $9,800 in its 2015 financial statements. 
C) Wilbur will record a cash outflow from operating activities of $10,000 in its 2016 financial statements. 
D) Wilbur will record a cash outflow from operating activities of $9,800 in its 2016 financial statements.

Question 14

Which of the following is not a capital expenditure?

Accepted Answer

A) Advertising expenditures to introduce a new product line. 
B) Sales tax paid in conjunction with the purchase of new machinery. 
C) Installation of elevators to replace escalators. 
D) An amount paid to acquire a patent with a remaining life of only three years. 
A) Advertising expenditures to introduce a new product line. 
B) Sales tax paid in conjunction with the purchase of new machinery. 
C) Installation of elevators to replace escalators. 
D) An amount paid to acquire a patent with a remaining life of only three years.

Question 15

Incidental costs incurred in the purchase of land that are charged to Land Improvements will affect net income at some future time.

Accepted Answer

A) True 
 B)False

Question 16

Accelerated depreciation methods are used primarily in:

Accepted Answer

A) Income tax returns. 
B) The financial statements of small businesses. 
C) The financial statements of publicly owned corporations. 
D) Companies with computer-based accounting systems. 
A) Income tax returns. 
B) The financial statements of small businesses. 
C) The financial statements of publicly owned corporations. 
D) Companies with computer-based accounting systems.

Question 17

A revenue expenditure is deducted from revenues in determining the net income for the period.

Accepted Answer

A) True 
 B)False

Question 18

If the 150% declining balance method is being used and an asset has a useful life of 20 years.What is the depreciation rate?

Accepted Answer

A) 7.5%. 
B) 10%. 
C) 15%. 
D) 150%. 
A) 7.5%. 
B) 10%. 
C) 15%. 
D) 150%.

Question 19

Tomassi Company paid $450,000 to acquire a piece of real estate consisting of land and an office building with a parking lot.In this situation:

Accepted Answer

A) The purchase price should be apportioned among the Land,Land Improvement,and Building accounts. 
B) The entire purchase price should be debited to the Land account only. 
C) Land,Land Improvement,and Building accounts should each be credited for the respective appraisal value of each item. 
D) Allocation of the entire $450,000 to Land results in an understatement of net income in the current and future accounting periods. 
A) The purchase price should be apportioned among the Land,Land Improvement,and Building accounts. 
B) The entire purchase price should be debited to the Land account only. 
C) Land,Land Improvement,and Building accounts should each be credited for the respective appraisal value of each item. 
D) Allocation of the entire $450,000 to Land results in an understatement of net income in the current and future accounting periods.

Question 20

The following expenditures are related to land,land improvements,and buildings,which were acquired on November 1,2015.   Required:
Determine the cost of the land,the building and the improvements (Round to the nearest dollar)
Prepare journal entries on December 31,2015 for depreciation assuming the building will have a useful life of 20 years and no residual value.Use double declining balance method and the half-year convention.Depreciate the land improvements using straight-line method,a 5 year life,to the nearest month with zero residual value (to the nearest dollar).

Accepted Answer

The cost of the land is $309,800 ($262,8

Exam 9: Plant and Intangible Assets

Revenue expenditures are recorded as:

Mayer Instrumentation sold a depreciable asset for cash of $300,000.The original cost of the asset was $1,200,000.Mayer recognized a gain of $45,000 on the sale.What was the amount of accumulated depreciation on the asset at the time of its sale?

Sum-of-the-years' digits is a decelerated method of depreciation which produces less depreciation expense in the early years of the asset's life and more expense in the later years.

Harvard Company purchased equipment having an invoice price of $11,500.The terms of sale were 2/10,n/30,and Harvard paid within the discount period.In addition,Harvard paid a $160 delivery charge,$185 installation charge,and $931 sales tax.The amount recorded as the cost of this equipment is:

Intangible assets are assets used in business operations but which:

To capitalize an expenditure means charging it to an asset account.

A coal mine is regarded as an underground inventory of coal and is recorded as a current asset,Underground Coal Inventory,in the balance sheet.

Sum-of-the-years' digits is a popular depreciation method for small businesses due to its simplicity.

Physical deterioration refers to the process of an asset becoming outdated as a result of the availability of improved, more efficient assets.

An asset which costs $97,600 and has accumulated depreciation of $82,000 is sold for $18,000.What amount of gain or loss will be recognized when the asset is sold?

In the early years of an asset's life,an accelerated depreciation method results in a more conservative balance sheet amount for the asset and a more conservative net income amount.

Material gains and losses from the disposal of plant and equipment are shown on the income statement as part of income from operations.

Wilbur Company purchased $10,000 of equipment on December 20,2015 on terms 2/15,net 30.Wilbur paid for the equipment on the 15th day following purchase and took advantage of the discount.Which of the following statements is correct?

Which of the following is not a capital expenditure?

Incidental costs incurred in the purchase of land that are charged to Land Improvements will affect net income at some future time.

Accelerated depreciation methods are used primarily in:

A revenue expenditure is deducted from revenues in determining the net income for the period.

If the 150% declining balance method is being used and an asset has a useful life of 20 years.What is the depreciation rate?

Tomassi Company paid $450,000 to acquire a piece of real estate consisting of land and an office building with a parking lot.In this situation:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

Filters

Wilbur Company purchased $10,000 of equipment on December 20,2015 on terms 2/15,net 30.Wilbur paid for the equipment on the 15^th day following purchase and took advantage of the discount.Which of the following statements is correct?