Question 1

Leasehold improvements become the property of the lessor at the end of the lease.

Accepted Answer

A) True 
 B)False

Question 2

Depreciation for tax purposes is identical to depreciation for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 3

The exclusive right to publish and sell a literary,artistic,or musical work is called a

Accepted Answer

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

Question 4

If a company's free cash flow is $66,000,net cash flows from operating activities total $133,000,purchases of plant assets total $61,000,and the payment of dividends was $20,000,what amount was obtained from the sale of plant assets?

Accepted Answer

A) $7,000 
B) $14,000 
C) $28,000 
D) Impossible to determine from the facts given. 
A) $7,000 
B) $14,000 
C) $28,000 
D) Impossible to determine from the facts given.

Question 5

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.

Accepted Answer

A) True 
 B)False

Question 6

When an asset lasts longer than its estimated useful life,depreciation no longer should be recorded.

Accepted Answer

A) True 
 B)False

Question 7

Drilling equipment with a ten-year useful life is used solely in conjunction with an oil well that has an eight-year life.The equipment should be depreciated over eight years using the production method.

Accepted Answer

A) True 
 B)False

Question 8

Horshack Mining Company purchases a gravel pit for $5,000,000.It estimates that 10,000,000 tons of gravel can be extracted over the pit's useful life.If 2,000,000 tons are extracted during the first year but only 1,440,000 tons are sold,what amount should be recorded for Gravel Inventory and Depletion Expense,respectively?

Accepted Answer

A) $280,000 and 720,000 
B) $720,000 and $280,000 
C) $720,000 and 720,000 
D) $280,000 and $1,000,000 
A) $280,000 and 720,000 
B) $720,000 and $280,000 
C) $720,000 and 720,000 
D) $280,000 and $1,000,000

Question 9

Which of the following would be considered a revenue expenditure?

Accepted Answer

A) Purchase of a microcomputer 
B) Installation of a heating system 
C) Addition of a building wing 
D) Replacement of a truck's battery 
A) Purchase of a microcomputer 
B) Installation of a heating system 
C) Addition of a building wing 
D) Replacement of a truck's battery

Question 10

When discarding equipment,depreciation need not by updated.

Accepted Answer

A) True 
 B)False

Question 11

Oswald purchased land for $48,000 and paid an additional $2,000 to install parking space.The entry to record the payment for the parking space is:

Accepted Answer

A) Land 50,000 Cash 50,000 
B) Land Improvements 50,000 Cash 50,000 
C) Land Improvements 2,000 Cash 2,000 
D) Land Improvements 46,000 Cash 46,000 
A) Land 50,000 Cash 50,000 
B) Land Improvements 50,000 Cash 50,000 
C) Land Improvements 2,000 Cash 2,000 
D) Land Improvements 46,000 Cash 46,000

Question 12

Gonzalez Printing purchased a new printing press for $80,000.It depreciates the press over a five-year period,using the double-declining-balance method of depreciation.If the press has an $8,000 estimated residual value,calculate depreciation expense for each of the five years.(Show your work.)

Accepted Answer

Year 1: $32,000 (100% F1F1F1S1F1F1F10 5

Question 13

Preston Corporation purchased a truck for $40,000.The company expected the truck to last four years or 100,000 miles,with an estimated residual value of $4,000 at the end of that time.During the second year,the truck was driven 27,500 miles.Compute the depreciation for the second year under each of the following methods: (a)straight-line,(b)production,and (c)double-declining-balance.(Show your work.)

Accepted Answer

a.$9,000 [($40,000 - $4,000)F1F1F1S1F1F

Question 14

Depreciation is a process of allocation,not of valuation.

Accepted Answer

A) True 
 B)False

Question 15

Present two arguments in favor of the use of accelerated depreciation.

Accepted Answer

First,assets tend to be more productive

Question 16

Gomez Company purchases a piece of equipment on Jan.2,2014,for $30,000.The equipment has an estimated life of eight years or 50,000 units of production and an estimated residual value of $3,000.Lester uses a calendar fiscal year.The entry to record the amount of depreciation for 2014,using the production method and assuming 8,000 units are produced,is

Accepted Answer

A) debit to Depreciation Expense,4,000; credit to Cash,4,000 
B) debit to Cash,4,160; credit to Accumulated Depreciation,4,160 
C) debit to Depreciation Expense,4,320; credit to Accumulated Depreciation,4,320 
D) debit to Depreciation Expense,4,800; credit to Accumulated Depreciation,4,800 
A) debit to Depreciation Expense,4,000; credit to Cash,4,000 
B) debit to Cash,4,160; credit to Accumulated Depreciation,4,160 
C) debit to Depreciation Expense,4,320; credit to Accumulated Depreciation,4,320 
D) debit to Depreciation Expense,4,800; credit to Accumulated Depreciation,4,800

Question 17

The cost of a long-term asset is expensed

Accepted Answer

A) in the period in which it is sold. 
B) in the period in which it is acquired. 
C) as the asset benefits the company. 
D) when it is paid for. 
A) in the period in which it is sold. 
B) in the period in which it is acquired. 
C) as the asset benefits the company. 
D) when it is paid for.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would not be included in the cost of land?

Accepted Answer

A) Cost of clearing unneeded building from land 
B) Sewer assessment from local government 
C) Cost of paving land for parking 
D) Commission to real estate agent 
A) Cost of clearing unneeded building from land 
B) Sewer assessment from local government 
C) Cost of paving land for parking 
D) Commission to real estate agent

Question 20

An asset was purchased for $100,000.It had an estimated residual value of $20,000 and an estimated useful life of ten years.After four years of use,the estimated residual value is revised to $14,000.Assuming straight-line depreciation,depreciation expense in year 5 of use would be

Accepted Answer

A) $7,667. 
B) $8,572. 
C) $9,000. 
D) $14,334. 
A) $7,667. 
B) $8,572. 
C) $9,000. 
D) $14,334.

Leasehold improvements become the property of the lessor at the end of the lease.

Depreciation for tax purposes is identical to depreciation for financial reporting purposes.

The exclusive right to publish and sell a literary,artistic,or musical work is called a

If a company's free cash flow is $66,000,net cash flows from operating activities total $133,000,purchases of plant assets total $61,000,and the payment of dividends was $20,000,what amount was obtained from the sale of plant assets?

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.

When an asset lasts longer than its estimated useful life,depreciation no longer should be recorded.

Drilling equipment with a ten-year useful life is used solely in conjunction with an oil well that has an eight-year life.The equipment should be depreciated over eight years using the production method.

Which of the following would be considered a revenue expenditure?

When discarding equipment,depreciation need not by updated.

Oswald purchased land for $48,000 and paid an additional $2,000 to install parking space.The entry to record the payment for the parking space is:

Gonzalez Printing purchased a new printing press for $80,000.It depreciates the press over a five-year period,using the double-declining-balance method of depreciation.If the press has an $8,000 estimated residual value,calculate depreciation expense for each of the five years.(Show your work.)

Depreciation is a process of allocation,not of valuation.

Present two arguments in favor of the use of accelerated depreciation.

The cost of a long-term asset is expensed

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

Which of the following would not be included in the cost of land?

An asset was purchased for $100,000.It had an estimated residual value of $20,000 and an estimated useful life of ten years.After four years of use,the estimated residual value is revised to $14,000.Assuming straight-line depreciation,depreciation expense in year 5 of use would be

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

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Exam 10: Long -Term Assets

Leasehold improvements become the property of the lessor at the end of the lease.

Depreciation for tax purposes is identical to depreciation for financial reporting purposes.

The exclusive right to publish and sell a literary,artistic,or musical work is called a

If a company's free cash flow is $66,000,net cash flows from operating activities total $133,000,purchases of plant assets total $61,000,and the payment of dividends was $20,000,what amount was obtained from the sale of plant assets?

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.

When an asset lasts longer than its estimated useful life,depreciation no longer should be recorded.

Drilling equipment with a ten-year useful life is used solely in conjunction with an oil well that has an eight-year life.The equipment should be depreciated over eight years using the production method.

Which of the following would be considered a revenue expenditure?

When discarding equipment,depreciation need not by updated.

Oswald purchased land for $48,000 and paid an additional $2,000 to install parking space.The entry to record the payment for the parking space is:

Gonzalez Printing purchased a new printing press for $80,000.It depreciates the press over a five-year period,using the double-declining-balance method of depreciation.If the press has an $8,000 estimated residual value,calculate depreciation expense for each of the five years.(Show your work.)

Depreciation is a process of allocation,not of valuation.

Present two arguments in favor of the use of accelerated depreciation.

The cost of a long-term asset is expensed

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

Which of the following would not be included in the cost of land?

An asset was purchased for $100,000.It had an estimated residual value of $20,000 and an estimated useful life of ten years.After four years of use,the estimated residual value is revised to $14,000.Assuming straight-line depreciation,depreciation expense in year 5 of use would be

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