Question 1

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Accepted Answer

Revenue expenditures do not materially i

Question 2

A company exchanged its used machine for a new machine in a transaction that had commercial substance. The old machine cost $70,000, and the new one had a cash price of $95,000. The company had taken $60,000 depreciation on the old machine and was allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash. What gain or loss should be recorded on the exchange?

Accepted Answer

The answer of A company exchanged its used machine for...

Question 3

On January 1, a machine costing $260,000 with a 4-year life and an estimated $5,000 residual value was purchased. It was also estimated that the machine would produce 500,000 units during its life. The actual units produced during its first year of operation were 110,000. Determine the amount of depreciation expense for the first year under each of the following assumptions:
1. The company uses the straight-line method of depreciation.
2. The company uses the units-of-production method of depreciation.
3. The company uses the double-declining-balance method of depreciation.

Accepted Answer

1. ($260,000 - $5,000)/4 = $63

Question 4

An item of property, plant and equipment's useful life might not be the same as its productive life.

Accepted Answer

A) True 
 B)False

Question 5

Depreciation expense is calculated using estimates of an asset's residual value and useful life.

Accepted Answer

A) True 
 B)False

Question 6

A company purchased mining property containing 15,000,000 tons of ore for $4,875,000. In Year 1, it mined 789,000 tons of ore and in Year 2, it mined 1,235,000 tons. Calculate the depletion expense for Year 1 and Year 2.

Accepted Answer

$4,875,000/15,000,000 tons = $

Question 7

A total asset turnover ratio of 3.5 indicates that:

Accepted Answer

A)  For every $1 in sales, the firm acquired $3.50 in assets during the period. 
B)  For every $1 in assets, the firm produced $3.50 in net sales during the period. 
C)  For every $1 in assets, the firm earned gross profit of $3.50 during the period. 
D)  For every $1 in assets, the firm earned $3.50 in net income. 
E)  For every $1 in assets, the firm paid $3.50 in expenses during the period. 
A)  For every $1 in sales, the firm acquired $3.50 in assets during the period. 
B)  For every $1 in assets, the firm produced $3.50 in net sales during the period. 
C)  For every $1 in assets, the firm earned gross profit of $3.50 during the period. 
D)  For every $1 in assets, the firm earned $3.50 in net income. 
E)  For every $1 in assets, the firm paid $3.50 in expenses during the period.

Question 8

On April 1, Year 1, SAS Corp. purchased and placed in service an item of property, plant and equipment. The following information is available regarding the item of property, plant and equipment:
   Make the necessary adjusting journal entries at December 31, Year 1, and December 31, Year 2 to record depreciation for each year under the following depreciation methods:
a. Straight-line.
b. Double-declining-balance.

Accepted Answer

The answer of On April 1, Year 1, SAS Corp....

Question 9

Lomax Enterprises purchased a depreciable asset for $22,000 on March 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's residual value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, Year 4?

Accepted Answer

A)  $5,000.00 
B)  $4,166.67 
C)  $16,666.68 
D)  $20,000.00 
E)  $19,166.67 
A)  $5,000.00 
B)  $4,166.67 
C)  $16,666.68 
D)  $20,000.00 
E)  $19,166.67

Question 10

A copyright:

Accepted Answer

A)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years. 
B)  Gives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years. 
C)  Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years. 
D)  Is the amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately. 
E)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years. 
A)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years. 
B)  Gives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years. 
C)  Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years. 
D)  Is the amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately. 
E)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years.

Question 11

Identify each of the following assets by balance sheet classification by placing an X in the correct classification: Property, plant and equipment, Natural Resources, or Intangibles.

Accepted Answer

The answer of Identify each of the following assets by...

Question 12

On July 1 of the current year, a company purchased and placed in service a machine with a cost of $240,000. The company estimated the machine's useful life to be four years or 60,000 units of output with an estimated residual value of $60,000. During the current year, 15,000 units were produced.
Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses:
a. The straight-line method of depreciation.
b. The units-of-production method of depreciation.
c. The double-declining balance method of depreciation.

Accepted Answer

The answer of On July 1 of the current year,...

Question 13

When a company constructs a building, the cost of the building includes materials and labor, design fees, building permits, and insurance during construction.

Accepted Answer

A) True 
 B)False

Question 14

A company purchased a heating system on January 2 for $225,000. The system had an estimated useful life of 15 years. On January 3 of the thirteenth year, the company completed a renovation of the system at a cost of $33,000 and now expects the system to be more efficient and last 8 years beyond the original estimate. The company uses the straight-line method of depreciation.
(a) Prepare the journal entry at January 3, to record the renovation of the heating system.
(b) Prepare the journal entry at December 31, to record the revised depreciation for the thirteenth year.

Accepted Answer

The answer of A company purchased a heating system on...

Question 15

Inadequacy refers to:

Accepted Answer

A)  The insufficient capacity of a company's property, plant and equipment to meet the company's growing production demands. 
B)  An asset that is worn out. 
C)  An asset that is no longer useful in producing goods and services. 
D)  The condition where the residual value is too small to replace the asset. 
E)  The condition where the asset's residual value is less than its cost. 
A)  The insufficient capacity of a company's property, plant and equipment to meet the company's growing production demands. 
B)  An asset that is worn out. 
C)  An asset that is no longer useful in producing goods and services. 
D)  The condition where the residual value is too small to replace the asset. 
E)  The condition where the asset's residual value is less than its cost.

Question 16

Explain how to calculate total asset turnover. Describe what it reveals about a company's financial condition, whether a higher or lower ratio is desirable, and how it is best applied for comparative purposes.

Accepted Answer

Total asset turnover is calculated by di

Question 17

The cost of fees for insuring the title and any accrued property taxes are included in the cost of land.

Accepted Answer

A) True 
 B)False

Question 18

Rockport Company reports the following in millions: net sales of $25,355 for 2011 and $22,340 for 2010; end-of-year total assets of $15,875 for 2011 and $13,860 for 2010. Compute its total asset turnover for 2011 and assess its level if competitors average a total asset turnover of 2.0 times.

Accepted Answer

$25,355/((15,875 + 13,860)/2)

Question 19

A company's property records revealed the following information about its property, plant and equipment:
   Calculate the depreciation expense for each machine for the year ended December 31 for Year 1, and for the year ended December 31 for Year 2.

Accepted Answer

Machine 1:
Year 1: [($42,000 - $3,000)/3

Question 20

Mason Company sold a piece of equipment for $25,000 cash on December 31 after recording the annual depreciation on the asset. The equipment had an original cost of $92,500 and accumulated depreciation of $60,000. Prepare the general journal entry to record the sale of this asset.

Accepted Answer

The answer of Mason Company sold a piece of equipment...

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

An item of property, plant and equipment's useful life might not be the same as its productive life.

Depreciation expense is calculated using estimates of an asset's residual value and useful life.

A company purchased mining property containing 15,000,000 tons of ore for $4,875,000. In Year 1, it mined 789,000 tons of ore and in Year 2, it mined 1,235,000 tons. Calculate the depletion expense for Year 1 and Year 2.

A total asset turnover ratio of 3.5 indicates that:

A copyright:

Identify each of the following assets by balance sheet classification by placing an X in the correct classification: Property, plant and equipment, Natural Resources, or Intangibles.

When a company constructs a building, the cost of the building includes materials and labor, design fees, building permits, and insurance during construction.

Inadequacy refers to:

Explain how to calculate total asset turnover. Describe what it reveals about a company's financial condition, whether a higher or lower ratio is desirable, and how it is best applied for comparative purposes.

The cost of fees for insuring the title and any accrued property taxes are included in the cost of land.

Rockport Company reports the following in millions: net sales of $25,355 for 2011 and $22,340 for 2010; end-of-year total assets of $15,875 for 2011 and $13,860 for 2010. Compute its total asset turnover for 2011 and assess its level if competitors average a total asset turnover of 2.0 times.

A company's property records revealed the following information about its property, plant and equipment: Calculate the depreciation expense for each machine for the year ended December 31 for Year 1, and for the year ended December 31 for Year 2.

Mason Company sold a piece of equipment for $25,000 cash on December 31 after recording the annual depreciation on the asset. The equipment had an original cost of $92,500 and accumulated depreciation of $60,000. Prepare the general journal entry to record the sale of this asset.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

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Exam 10: Long-Term Assets

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

An item of property, plant and equipment's useful life might not be the same as its productive life.

Depreciation expense is calculated using estimates of an asset's residual value and useful life.

A company purchased mining property containing 15,000,000 tons of ore for $4,875,000. In Year 1, it mined 789,000 tons of ore and in Year 2, it mined 1,235,000 tons. Calculate the depletion expense for Year 1 and Year 2.

A total asset turnover ratio of 3.5 indicates that:

A copyright:

Identify each of the following assets by balance sheet classification by placing an X in the correct classification: Property, plant and equipment, Natural Resources, or Intangibles.

When a company constructs a building, the cost of the building includes materials and labor, design fees, building permits, and insurance during construction.

Inadequacy refers to:

Explain how to calculate total asset turnover. Describe what it reveals about a company's financial condition, whether a higher or lower ratio is desirable, and how it is best applied for comparative purposes.

The cost of fees for insuring the title and any accrued property taxes are included in the cost of land.

Rockport Company reports the following in millions: net sales of $25,355 for 2011 and $22,340 for 2010; end-of-year total assets of $15,875 for 2011 and $13,860 for 2010. Compute its total asset turnover for 2011 and assess its level if competitors average a total asset turnover of 2.0 times.

A company's property records revealed the following information about its property, plant and equipment: Calculate the depreciation expense for each machine for the year ended December 31 for Year 1, and for the year ended December 31 for Year 2.

Mason Company sold a piece of equipment for $25,000 cash on December 31 after recording the annual depreciation on the asset. The equipment had an original cost of $92,500 and accumulated depreciation of $60,000. Prepare the general journal entry to record the sale of this asset.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters