Question 1

A ________ results from revising estimates of the useful life or salvage value of a plant asset.

Accepted Answer

change in

Question 2

A company purchased a tract of land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The salvage value of the land is expected to be $250,000.If 150,000 tons of ore are mined during the first year,the journal entry to record the depletion is:

Accepted Answer

A) Debit Depletion Expense $93,750; credit Natural Resources $93,750. 
B) Debit Cash $112,500; credit Natural Resources $112,500. 
C) Debit Depletion Expense $93,750; credit Accumulated Depletion $93,750. 
D) Debit Cash $93,750; credit Accumulated Depletion $93,750. 
E) Debit Depletion Expense $112,500; credit Accumulated Depletion $112,500. 
A) Debit Depletion Expense $93,750; credit Natural Resources $93,750. 
B) Debit Cash $112,500; credit Natural Resources $112,500. 
C) Debit Depletion Expense $93,750; credit Accumulated Depletion $93,750. 
D) Debit Cash $93,750; credit Accumulated Depletion $93,750. 
E) Debit Depletion Expense $112,500; credit Accumulated Depletion $112,500.

Question 3

Revenue expenditures:

Accepted Answer

A) Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities. 
B) Are known as balance sheet expenditures because they relate to plant assets. 
C) Extend the asset's useful life. 
D) Substantially benefit future periods. 
E) Are debited to asset accounts when incurred. 
A) Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities. 
B) Are known as balance sheet expenditures because they relate to plant assets. 
C) Extend the asset's useful life. 
D) Substantially benefit future periods. 
E) Are debited to asset accounts when incurred.

Question 4

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 5

A plant asset's useful life is the length of time it is productively used in a company's operations.

Accepted Answer

A) True 
 B)False

Question 6

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 5 years with a $4,000 salvage value.Depreciation expense in year 2 is:

Accepted Answer

A) $4,800. 
B) $8,000. 
C) $9,600. 
D) $5,760. 
E) $14,400. 
A) $4,800. 
B) $8,000. 
C) $9,600. 
D) $5,760. 
E) $14,400.

Question 7

Natural resources are:

Accepted Answer

A) Consumable assets such standing timber,mineral deposits,and oil and gas fields. 
B) Tangible assets used in the operations of the business. 
C) Current assets because they are depleted. 
D) Not subject to allocation to expense over their useful lives. 
E) Depleted using a straight-line method. 
A) Consumable assets such standing timber,mineral deposits,and oil and gas fields. 
B) Tangible assets used in the operations of the business. 
C) Current assets because they are depleted. 
D) Not subject to allocation to expense over their useful lives. 
E) Depleted using a straight-line method.

Question 8

A new machine costing $1,800,000 cash and estimated to have a $60,000 salvage value was purchased on January 1.The machine is expected to produce 600,000 units of product during its 8-year useful life.Calculate the depreciation expense in the first year under the following independent situations:
1.The company uses the units-of-production method and the machine produces 70,000 units of product during its first year.
2.The company uses the double-declining-balance method.
3.The company uses the straight-line method.

Accepted Answer

1.($1,800,000 − $60,000)/600,0

Question 9

Fields Company purchased equipment on January 1 for $180,000.This system has a useful life of 8 years and a salvage value of $20,000.The company estimates that the equipment will produce 40,000 units over its 8-year useful life.Actual units produced are: Year 1 - 4,000 units; Year 2 - 6,000 units; Year 3 - 8,000 units; Year 4 - 5,000 units; Year 5 - 4,000 units; Year 6 - 5,000 units; Year 7 - 7,000 units; Year 8 - 3,000 units.What would be the depreciation expense for the second year of its useful life using the straight-line method?

Accepted Answer

A) $20,000. 
B) $45,000. 
C) $33,750. 
D) $16,000. 
E) $24,000. 
A) $20,000. 
B) $45,000. 
C) $33,750. 
D) $16,000. 
E) $24,000.

Question 10

A company purchased a weaving machine for $190,000.The machine has a useful life of 8 years and a residual value of $10,000.It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life.In the first year,15,000 bolts were produced.In the second year,production increased to 19,000 units.Using the units-of-production method,what is the amount of accumulated depreciation at the end of the second year?

Accepted Answer

A) $48,133. 
B) $45,600. 
C) $86,133. 
D) $23,750. 
E) $81,600. 
A) $48,133. 
B) $45,600. 
C) $86,133. 
D) $23,750. 
E) $81,600.

Question 11

It is necessary to report both the cost and the accumulated depreciation of plant assets in the financial statements.

Accepted Answer

A) True 
 B)False

Question 12

On April 1,Year 1,Raines Co.purchased and placed a plant asset in service.The following information is available regarding the plant asset:
   Make the necessary adjusting journal entries at December 31,Year 1,and December 31,Year 2 to record depreciation for each year under the double-declining-balance depreciation method:

Accepted Answer

The answer of On April 1,Year 1,Raines Co.purchased and placed...

Question 13

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

Accepted Answer

Machine 1: Years 1 & 2: [($82,

Question 14

The process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use is called depreciation.

Accepted Answer

A) True 
 B)False

Question 15

When originally purchased,a vehicle costing $23,000 had an estimated useful life of 8 years and an estimated salvage value of $3,000.After 4 years of straight-line depreciation,the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value.The depreciation expense in year 5 equals:

Accepted Answer

A) $5,000. 
B) $2,875. 
C) $5,750. 
D) $11,500. 
E) $2,500. 
A) $5,000. 
B) $2,875. 
C) $5,750. 
D) $11,500. 
E) $2,500.

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

On January 2,2010,a company purchased a delivery truck for $45,000 cash.The truck had an estimated useful life of seven years and an estimated salvage value of $3,000.The straight-line method of depreciation was used.Prepare the journal entries to record depreciation expense and the disposition of the truck on September 1,2014,under each of the following assumptions:
a.The truck and $45,000 cash were given in exchange for a new delivery truck that had a cash price of $60,000.This transaction has commercial substance.
b.The truck and $40,000 cash were exchanged for a new delivery truck that had a cash price of $60,000.This transaction has commercial substance.

Accepted Answer

The answer of On January 2,2010,a company purchased a delivery...

Question 18

Depletion is the process of allocating the cost of natural resources to periods when they are consumed.

Accepted Answer

A) True 
 B)False

Question 19

The depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

Accepted Answer

A) Book value depreciation. 
B) Declining-balance depreciation. 
C) Straight-line depreciation. 
D) Units-of-production depreciation. 
E) Modified accelerated cost recovery system (MACRS)depreciation. 
A) Book value depreciation. 
B) Declining-balance depreciation. 
C) Straight-line depreciation. 
D) Units-of-production depreciation. 
E) Modified accelerated cost recovery system (MACRS)depreciation.

Question 20

Depreciation:

Accepted Answer

A) Measures the decline in market value of an asset. 
B) Measures physical deterioration of an asset. 
C) Is the process of allocating the cost of a plant asset to expense. 
D) Is an outflow of cash from the use of a plant asset. 
E) Is applied to land. 
A) Measures the decline in market value of an asset. 
B) Measures physical deterioration of an asset. 
C) Is the process of allocating the cost of a plant asset to expense. 
D) Is an outflow of cash from the use of a plant asset. 
E) Is applied to land.

A ________ results from revising estimates of the useful life or salvage value of a plant asset.

A company purchased a tract of land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The salvage value of the land is expected to be $250,000.If 150,000 tons of ore are mined during the first year,the journal entry to record the depletion is:

Revenue expenditures:

A total asset turnover ratio of 3.5 indicates that:

A plant asset's useful life is the length of time it is productively used in a company's operations.

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 5 years with a $4,000 salvage value.Depreciation expense in year 2 is:

Natural resources are:

It is necessary to report both the cost and the accumulated depreciation of plant assets in the financial statements.

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

The process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use is called depreciation.

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.

Depletion is the process of allocating the cost of natural resources to periods when they are consumed.

The depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

Depreciation:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 8: Reporting and Analyzing Long-Term Assets

A ________ results from revising estimates of the useful life or salvage value of a plant asset.

A company purchased a tract of land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The salvage value of the land is expected to be $250,000.If 150,000 tons of ore are mined during the first year,the journal entry to record the depletion is:

Revenue expenditures:

A total asset turnover ratio of 3.5 indicates that:

A plant asset's useful life is the length of time it is productively used in a company's operations.

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 5 years with a $4,000 salvage value.Depreciation expense in year 2 is:

Natural resources are:

It is necessary to report both the cost and the accumulated depreciation of plant assets in the financial statements.

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

The process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use is called depreciation.

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.

Depletion is the process of allocating the cost of natural resources to periods when they are consumed.

The depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

Depreciation:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

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