Question 1

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 2

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 3

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 4

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

Accepted Answer

In the year of purchase,both net income

Question 5

The construction of a new wing on an existing building is described as a(n)

Accepted Answer

A) addition. 
B) extraordinary repair. 
C) revenue expenditure. 
D) betterment. 
A) addition. 
B) extraordinary repair. 
C) revenue expenditure. 
D) betterment.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Licenses are properly classified as intangible assets.

Accepted Answer

A) True 
 B)False

Question 8

A revenue expenditure results in the recognition of an asset.

Accepted Answer

A) True 
 B)False

Question 9

A contract limiting the rights of others to go into business in a specific industry or line of business for a specified period is called a

Accepted Answer

A) noncompete covenant. 
B) patent. 
C) copyright. 
D) trademark. 
A) noncompete covenant. 
B) patent. 
C) copyright. 
D) trademark.

Question 10

Davida's Delivery Service purchased a delivery van for $30,000.The van had an estimated useful life of six years and an estimated residual value of $6,000.After four years of use,the total estimated useful life is revised to seven years.Assuming straight-line depreciation,depreciation expense in year 5 would be (amounts rounded)

Accepted Answer

A) $2,667. 
B) $4,667. 
C) $2,000. 
D) $1,143. 
A) $2,667. 
B) $4,667. 
C) $2,000. 
D) $1,143.

Question 11

Fair value is the amount for which an asset could be bought or sold in a current transaction.

Accepted Answer

A) True 
 B)False

Question 12

Mineral deposits are subject to a process called depletion.

Accepted Answer

A) True 
 B)False

Question 13

What is goodwill and when may it be recorded?

Accepted Answer

Goodwill represents the excess

Question 14

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 15

The following machines were purchased during 2014:
Machine A for $6,000 on April 5
Machine B for $4,000 on August 24
Machine C for $5,000 on November 10
Assuming that each machine has an estimated useful life of six years and a 10 percent residual value,calculate total depreciation expense for 2014 (assume straight-line depreciation and round to the nearest month and the company reports on a calendar-year basis).

Accepted Answer

The answer of The following machines were purchased during 2014:
Machine...

Question 16

All of the following are possible reasons for using accelerated depreciation except

Accepted Answer

A) greater efficiency of assets when new. 
B) increasing repair costs in later years. 
C) rapid changes in technology. 
D) increasing use of an asset over the years. 
A) greater efficiency of assets when new. 
B) increasing repair costs in later years. 
C) rapid changes in technology. 
D) increasing use of an asset over the years.

Question 17

Inventory is classified as a long-term asset.

Accepted Answer

A) True 
 B)False

Question 18

A revenue expenditure results in the immediate recognition of an expense.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is not true about depreciation for tax purposes?

Accepted Answer

A) The straight-line method is used for most assets. 
B) The same methods are not acceptable for financial reporting. 
C) Plant assets are written off rapidly. 
D) There is a bonus first-year deduction. 
A) The straight-line method is used for most assets. 
B) The same methods are not acceptable for financial reporting. 
C) Plant assets are written off rapidly. 
D) There is a bonus first-year deduction.

Question 20

The cost of a natural resource is expensed in the year during which the resource is

Accepted Answer

A) purchased. 
B) extracted. 
C) paid for. 
D) sold. 
A) purchased. 
B) extracted. 
C) paid for. 
D) sold.

Which of the following most appropriately describes depreciation?

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

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

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

The construction of a new wing on an existing building is described as a(n)

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

Licenses are properly classified as intangible assets.

A revenue expenditure results in the recognition of an asset.

A contract limiting the rights of others to go into business in a specific industry or line of business for a specified period is called a

Fair value is the amount for which an asset could be bought or sold in a current transaction.

Mineral deposits are subject to a process called depletion.

What is goodwill and when may it be recorded?

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 possible reasons for using accelerated depreciation except

Inventory is classified as a long-term asset.

A revenue expenditure results in the immediate recognition of an expense.

Which of the following statements is not true about depreciation for tax purposes?

The cost of a natural resource is expensed in the year during which the resource is

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

Which of the following most appropriately describes depreciation?

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

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

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

The construction of a new wing on an existing building is described as a(n)

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

Licenses are properly classified as intangible assets.

A revenue expenditure results in the recognition of an asset.

A contract limiting the rights of others to go into business in a specific industry or line of business for a specified period is called a

Fair value is the amount for which an asset could be bought or sold in a current transaction.

Mineral deposits are subject to a process called depletion.

What is goodwill and when may it be recorded?

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 possible reasons for using accelerated depreciation except

Inventory is classified as a long-term asset.

A revenue expenditure results in the immediate recognition of an expense.

Which of the following statements is not true about depreciation for tax purposes?

The cost of a natural resource is expensed in the year during which the resource is

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