Question 1

Accelerated methods of depreciation result in lower net income in the last years of an asset's life compared to the straight-line method.

Accepted Answer

A) True 
 B)False

Question 2

Gain on Sale of Machinery is recorded as a debit.

Accepted Answer

A) True 
 B)False

Question 3

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

Accepted Answer

A) $5,000. 
B) $12,500. 
C) $17,500. 
D) impossible to determine from the facts given. 
A) $5,000. 
B) $12,500. 
C) $17,500. 
D) impossible to determine from the facts given.

Question 4

A negative free cash flow means that all cash commitments have been met.

Accepted Answer

A) True 
 B)False

Question 5

Free cash flow is a good measure of a company's ability to finance long-term assets.

Accepted Answer

A) True 
 B)False

Question 6

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

Accepted Answer

A) is incurred subsequent to asset use. 
B) exceeds a certain dollar amount. 
C) is incurred prior to asset use. 
D) will expire in less than one year. 
A) is incurred subsequent to asset use. 
B) exceeds a certain dollar amount. 
C) is incurred prior to asset use. 
D) will expire in less than one year.

Question 7

When an extraordinary repair has been made to equipment,which of the following accounts is debited?

Accepted Answer

A) Extraordinary Repairs 
B) Equipment 
C) Accumulated Deprecation 
D) Cash 
A) Extraordinary Repairs 
B) Equipment 
C) Accumulated Deprecation 
D) Cash

Question 8

A capital expenditure will result in an immediate increase in long-term assets.

Accepted Answer

A) True 
 B)False

Question 9

What commitments must a company account for in determining its free cash flow?

Accepted Answer

Free cash flow is the amount of cash tha

Question 10

The depletion calculation is similar to which of the following depreciation methods?

Accepted Answer

A) Double-declining-balance 
B) Straight-line 
C) Group 
D) Production 
A) Double-declining-balance 
B) Straight-line 
C) Group 
D) Production

Question 11

Equipment is purchased for $60,000.It has a five-year useful life and a $10,000 residual value.Under the double-declining-balance method,what is the depreciation expense for year 3?

Accepted Answer

A) $6,400 
B) $7,200 
C) $7,680 
D) $8,640 
A) $6,400 
B) $7,200 
C) $7,680 
D) $8,640

Question 12

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

Accepted Answer

A) True 
 B)False

Question 13

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 straight-line method,is

Accepted Answer

A) debit to Depreciation Expense,3,750; credit to Cash,3,750 
B) debit to Depreciation Expense,3,375; credit to Accumulated Depreciation,3,375 
C) debit to Depreciation Expense,2,500; credit to Accumulated Depreciation,2,500 
D) debit to Accumulated Depreciation,2,250; credit to Cash,2,250 
A) debit to Depreciation Expense,3,750; credit to Cash,3,750 
B) debit to Depreciation Expense,3,375; credit to Accumulated Depreciation,3,375 
C) debit to Depreciation Expense,2,500; credit to Accumulated Depreciation,2,500 
D) debit to Accumulated Depreciation,2,250; credit to Cash,2,250

Question 14

Improperly classifying large expenditures as assets rather than expenses

Accepted Answer

A) could constitute fraud. 
B) understates income for the period. 
C) understates equity on the balance sheet. 
D) results in none of these options. 
A) could constitute fraud. 
B) understates income for the period. 
C) understates equity on the balance sheet. 
D) results in none of these options.

Question 15

Intangible assets are subject to a process called depreciation.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a component of free cash flow?

Accepted Answer

A) Purchases of plant assets 
B) Net income 
C) Dividends 
D) Net cash flows from operating activities 
A) Purchases of plant assets 
B) Net income 
C) Dividends 
D) Net cash flows from operating activities

Question 17

For tax purposes,small businesses may expense the first $250,000 of equipment expenditures,rather than having to allocate their costs over a number of years.

Accepted Answer

A) True 
 B)False

Question 18

A revenue expenditure results in a

Accepted Answer

A) debit to an expense account. 
B) credit to an expense account. 
C) debit to an asset account. 
D) credit to an asset account. 
A) debit to an expense account. 
B) credit to an expense account. 
C) debit to an asset account. 
D) credit to an asset account.

Question 19

On January 1,2014,Huan Manufacturing Company purchased for $94,000 a machine that will produce an estimated 75,000 units of Product X.The machine has an estimated useful life of five years and an estimated residual value of $4,000.Calculate the following amounts: (a)the carrying value of the machine after it has been used for three and one-half years,under the straight-line method; (b)depreciation expense for 2015,under the production method (assume that 13,000 units were produced that year); and (c)accumulated depreciation at the end of 2015,under the double-declining-balance method.(Show your work.)

Accepted Answer

a. $31,000 [($94,000 - $4,000)F1F1F1S1F

Question 20

The cost of a sewage system should be included in the Land Improvements account.

Accepted Answer

A) True 
 B)False

Accelerated methods of depreciation result in lower net income in the last years of an asset's life compared to the straight-line method.

Gain on Sale of Machinery is recorded as a debit.

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

A negative free cash flow means that all cash commitments have been met.

Free cash flow is a good measure of a company's ability to finance long-term assets.

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

When an extraordinary repair has been made to equipment,which of the following accounts is debited?

A capital expenditure will result in an immediate increase in long-term assets.

What commitments must a company account for in determining its free cash flow?

The depletion calculation is similar to which of the following depreciation methods?

Equipment is purchased for $60,000.It has a five-year useful life and a $10,000 residual value.Under the double-declining-balance method,what is the depreciation expense for year 3?

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

Improperly classifying large expenditures as assets rather than expenses

Intangible assets are subject to a process called depreciation.

Which of the following is not a component of free cash flow?

For tax purposes,small businesses may expense the first $250,000 of equipment expenditures,rather than having to allocate their costs over a number of years.

A revenue expenditure results in a

The cost of a sewage system should be included in the Land Improvements account.

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

Accelerated methods of depreciation result in lower net income in the last years of an asset's life compared to the straight-line method.

Gain on Sale of Machinery is recorded as a debit.

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

A negative free cash flow means that all cash commitments have been met.

Free cash flow is a good measure of a company's ability to finance long-term assets.

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

When an extraordinary repair has been made to equipment,which of the following accounts is debited?

A capital expenditure will result in an immediate increase in long-term assets.

What commitments must a company account for in determining its free cash flow?

The depletion calculation is similar to which of the following depreciation methods?

Equipment is purchased for $60,000.It has a five-year useful life and a $10,000 residual value.Under the double-declining-balance method,what is the depreciation expense for year 3?

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

Improperly classifying large expenditures as assets rather than expenses

Intangible assets are subject to a process called depreciation.

Which of the following is not a component of free cash flow?

For tax purposes,small businesses may expense the first $250,000 of equipment expenditures,rather than having to allocate their costs over a number of years.

A revenue expenditure results in a

The cost of a sewage system should be included in the Land Improvements account.

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