Question 1

Federal tax law does not allow the rapid write-off of plant assets.

Accepted Answer

A) True 
 B)False

Question 2

Group depreciation is an appropriate method for a large company calculating depreciation on office equipment.

Accepted Answer

A) True 
 B)False

Question 3

The expensing of a long-lived asset such as a wastebasket is justified by which of the following accounting rules or principles?

Accepted Answer

A) Matching 
B) Materiality 
C) Full disclosure 
D) Consistency 
A) Matching 
B) Materiality 
C) Full disclosure 
D) Consistency

Question 4

According to generally accepted accounting principles,goodwill is recorded as an asset

Accepted Answer

A) when favorable factors combine to create goodwill. 
B) when a company has superior earning power. 
C) when it is paid for as part of the purchase of a business. 
D) under no circumstances. 
A) when favorable factors combine to create goodwill. 
B) when a company has superior earning power. 
C) when it is paid for as part of the purchase of a business. 
D) under no circumstances.

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

Equipment costing $60,000 with a residual value of $6,000 and an estimated life of eight years has been depreciated using the straight-line method for two years.Assuming a revised estimated total life of five years,the depreciation expense for year 3 would be

Accepted Answer

A) $6,750. 
B) $9,000. 
C) $13,500. 
D) $10,800. 
A) $6,750. 
B) $9,000. 
C) $13,500. 
D) $10,800.

Question 7

The amount of depletion of a coal mine in a year may differ from the depletion expense in the same year because

Accepted Answer

A) depletion expense includes other costs in addition to depletion. 
B) depletion is based on the passage of time,whereas depletion expense is not. 
C) the mine is not in operation all year. 
D) some coal is unsold at the end of the year. 
A) depletion expense includes other costs in addition to depletion. 
B) depletion is based on the passage of time,whereas depletion expense is not. 
C) the mine is not in operation all year. 
D) some coal is unsold at the end of the year.

Question 8

Discuss the difference between the successful efforts and full-costing methods of accounting for oil and gas resources.What type of company is most likely to use each method?

Accepted Answer

With successful efforts accounting,the c

Question 9

A capital expenditure is an expenditure that benefits only the current accounting period.

Accepted Answer

A) True 
 B)False

Question 10

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.If the truck was discarded as having no value,the entry to record this event includes

Accepted Answer

A) a gain of $3,000. 
B) a loss of $3,000. 
C) a loss of $6,000. 
D) no recognition of a gain or loss. 
A) a gain of $3,000. 
B) a loss of $3,000. 
C) a loss of $6,000. 
D) no recognition of a gain or loss.

Question 11

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 2 using the double-declining-balance method?

Accepted Answer

A) $5,400 
B) $7,200 
C) $6,120 
D) $13,500 
A) $5,400 
B) $7,200 
C) $6,120 
D) $13,500

Question 12

The cost of land should not include accrued property taxes paid by the purchaser.

Accepted Answer

A) True 
 B)False

Question 13

Free cash flow is

Accepted Answer

A) a financial ratio. 
B) an important measure of a company's ability to finance long-term assets. 
C) what remains after deducting dividends declared from net income. 
D) an important measure of a company's ability to invest in short-term assets. 
A) a financial ratio. 
B) an important measure of a company's ability to finance long-term assets. 
C) what remains after deducting dividends declared from net income. 
D) an important measure of a company's ability to invest in short-term assets.

Question 14

Natural resources are classified as intangible assets on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

Obsolescence is not a reason for an asset's limited useful life.

Accepted Answer

A) True 
 B)False

Question 16

A natural resource is expensed in the year it is extracted rather than when it is sold.

Accepted Answer

A) True 
 B)False

Question 17

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 18

The entire cost of developing computer software should be capitalized and amortized over the software's useful life.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would be considered a revenue expenditure?

Accepted Answer

A) Cleaning the ink from a printing press 
B) Addition of a storeroom 
C) Purchase of office furniture 
D) Installation of audiovisual equipment in a classroom 
A) Cleaning the ink from a printing press 
B) Addition of a storeroom 
C) Purchase of office furniture 
D) Installation of audiovisual equipment in a classroom

Question 20

Plant assets used in conjunction with a natural resource typically are depreciated

Accepted Answer

A) using income tax depreciation. 
B) using an accelerated depreciation method. 
C) on the same basis as depletion is computed. 
D) on a straight-line basis. 
A) using income tax depreciation. 
B) using an accelerated depreciation method. 
C) on the same basis as depletion is computed. 
D) on a straight-line basis.

Federal tax law does not allow the rapid write-off of plant assets.

Group depreciation is an appropriate method for a large company calculating depreciation on office equipment.

The expensing of a long-lived asset such as a wastebasket is justified by which of the following accounting rules or principles?

According to generally accepted accounting principles,goodwill is recorded as an asset

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

Equipment costing $60,000 with a residual value of $6,000 and an estimated life of eight years has been depreciated using the straight-line method for two years.Assuming a revised estimated total life of five years,the depreciation expense for year 3 would be

The amount of depletion of a coal mine in a year may differ from the depletion expense in the same year because

Discuss the difference between the successful efforts and full-costing methods of accounting for oil and gas resources.What type of company is most likely to use each method?

A capital expenditure is an expenditure that benefits only the current accounting period.

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.If the truck was discarded as having no value,the entry to record this event includes

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 2 using the double-declining-balance method?

The cost of land should not include accrued property taxes paid by the purchaser.

Free cash flow is

Natural resources are classified as intangible assets on the balance sheet.

Obsolescence is not a reason for an asset's limited useful life.

A natural resource is expensed in the year it is extracted rather than when it is sold.

A leasehold is a payment

The entire cost of developing computer software should be capitalized and amortized over the software's useful life.

Which of the following would be considered a revenue expenditure?

Plant assets used in conjunction with a natural resource typically are depreciated

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

Supplement: 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

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters

Exam 10: Long -Term Assets

Federal tax law does not allow the rapid write-off of plant assets.

Group depreciation is an appropriate method for a large company calculating depreciation on office equipment.

The expensing of a long-lived asset such as a wastebasket is justified by which of the following accounting rules or principles?

According to generally accepted accounting principles,goodwill is recorded as an asset

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

Equipment costing $60,000 with a residual value of $6,000 and an estimated life of eight years has been depreciated using the straight-line method for two years.Assuming a revised estimated total life of five years,the depreciation expense for year 3 would be

The amount of depletion of a coal mine in a year may differ from the depletion expense in the same year because

Discuss the difference between the successful efforts and full-costing methods of accounting for oil and gas resources.What type of company is most likely to use each method?

A capital expenditure is an expenditure that benefits only the current accounting period.

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.If the truck was discarded as having no value,the entry to record this event includes

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 2 using the double-declining-balance method?

The cost of land should not include accrued property taxes paid by the purchaser.

Free cash flow is

Natural resources are classified as intangible assets on the balance sheet.

Obsolescence is not a reason for an asset's limited useful life.

A natural resource is expensed in the year it is extracted rather than when it is sold.

A leasehold is a payment

The entire cost of developing computer software should be capitalized and amortized over the software's useful life.

Which of the following would be considered a revenue expenditure?

Plant assets used in conjunction with a natural resource typically are depreciated

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

Supplement: 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

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters