Question 1

Expenditures that add to the utility of plant assets for more than one accounting period are

Accepted Answer

A) committed expenditures. 
B) revenue expenditures. 
C) current expenditures. 
D) capital expenditures. 
A) committed expenditures. 
B) revenue expenditures. 
C) current expenditures. 
D) capital expenditures.

Question 2

Which of the following is not properly classified as property, plant, and equipment?

Accepted Answer

A) Building used as a factory. 
B) Land used in ordinary business operations. 
C) A truck held for resale by an automobile dealership. 
D) Land improvement, such as parking lots and fences. 
A) Building used as a factory. 
B) Land used in ordinary business operations. 
C) A truck held for resale by an automobile dealership. 
D) Land improvement, such as parking lots and fences.

Question 3

The four subdivisions for plant assets are

Accepted Answer

A) land, land improvements, buildings, and equipment. 
B) intangibles, land, buildings, and equipment. 
C) furnishings and fixtures, land, buildings, and equipment. 
D) property, plant, equipment, and land. 
A) land, land improvements, buildings, and equipment. 
B) intangibles, land, buildings, and equipment. 
C) furnishings and fixtures, land, buildings, and equipment. 
D) property, plant, equipment, and land.

Question 4

Stine Company purchased machinery with a list price of $96,000. They were given a 10% discount by the manufacturer. They paid $600 for shipping and sales tax of $4,500. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $30,000. If Stine uses straight-line depreciation, annual depreciation will be

Accepted Answer

A) $6,150. 
B) $6,108. 
C) $9,150. 
D) $5,640. 
A) $6,150. 
B) $6,108. 
C) $9,150. 
D) $5,640.

Question 5

Which of the following is not an intangible asset arising from a government grant?

Accepted Answer

A) Goodwill. 
B) Patent. 
C) Trademark. 
D) Trade name. 
A) Goodwill. 
B) Patent. 
C) Trademark. 
D) Trade name.

Question 6

All of the following statements about the useful life factor associated with depreciation are true except

Accepted Answer

A) useful life is also called service life. 
B) useful life is an estimate of productive life. 
C) past experience with similar assets is helpful in establishing useful life. 
D) useful life is also called expected trade-in value. 
A) useful life is also called service life. 
B) useful life is an estimate of productive life. 
C) past experience with similar assets is helpful in establishing useful life. 
D) useful life is also called expected trade-in value.

Question 7

Burke Company purchases land for $180,000 cash. Burke assumes $5,000 in property taxes due on the land. The title and attorney fees totaled $2,000. Burke has the land graded for $4,400. They paid $20,000 for paving of a parking lot. What amount does Burke record as the cost for the land?

Accepted Answer

A) $186,400. 
B) $211,400. 
C) $191,400. 
D) $180,000. 
A) $186,400. 
B) $211,400. 
C) $191,400. 
D) $180,000.

Question 8

Units-of-activity is an appropriate depreciation method to use when

Accepted Answer

A) it is impossible to determine the productivity of the asset. 
B) the asset's use will be constant over its useful life. 
C) the productivity of the asset varies significantly from one period to another. 
D) the company is a manufacturing company. 
A) it is impossible to determine the productivity of the asset. 
B) the asset's use will be constant over its useful life. 
C) the productivity of the asset varies significantly from one period to another. 
D) the company is a manufacturing company.

Question 9

Pearson Company bought a machine on January 1, 2017. The machine cost $180,000 and had an expected salvage value of $30,000. The life of the machine was estimated to be 5 years. The depreciable cost of the machine is

Accepted Answer

A) $180,000. 
B) $150,000. 
C) $50,000. 
D) $30,000. 
A) $180,000. 
B) $150,000. 
C) $50,000. 
D) $30,000.

Question 10

The following information is provided for Nguyen Company and Northwest Corporation. $\begin{array}{lll}\text { (in } \$ \text { millions) }&\text { Nguven Company }&\text { Northwest Corporation }\
\text { Net income } 2017 & \$ 165 & \$ 420 \
\text { Net sales } 2017 & 1,650 & 4,900 \
\text { Total assets } 12 / 31 / 15 & 1,000 & 2,400 \
\text { Total assets } 12 / 31 / 16 & 1,050 & 3,000 \
\text { Total assets } 12 / 31 / 17 & 1,150 & 4,000
\end{array}$ If Nguyen and Northwest are in the same industry and the industry average for return on assets is equal to 30%, which of the following statements is true?

Accepted Answer

A) Nguyen is more profitable than the average company in its industry. 
B) Northwest is more profitable than Nguyen. 
C) Both Nguyen and Northwest are more profitable than the average company in their industry. 
D) Nguyen is more profitable than Northwest. 
A) Nguyen is more profitable than the average company in its industry. 
B) Northwest is more profitable than Nguyen. 
C) Both Nguyen and Northwest are more profitable than the average company in their industry. 
D) Nguyen is more profitable than Northwest.

Question 11

During 2017, Ronald Corporation reported net sales of $2,000,000, net income of $900,000, and depreciation expense of $100,000. Ronald also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Ronald's asset turnover is

Accepted Answer

A) 2.0 times. 
B) 1.6 times. 
C) 1.33 times. 
D) 0.72 times. 
A) 2.0 times. 
B) 1.6 times. 
C) 1.33 times. 
D) 0.72 times.

Question 12

Goodwill is recorded only when there is an exchange transaction that involves the purchase of an entire business.

Accepted Answer

A) True 
 B)False

Question 13

Whyte Clinic purchases land for $420,000 cash. The clinic assumes $4,500 in property taxes due on the land. The title and attorney fees totaled $3,000. The clinic had the land graded for $6,600. What amount does Whyte Clinic record as the cost for the land?

Accepted Answer

A) $426,600. 
B) $420,000. 
C) $434,100. 
D) $427,500. 
A) $426,600. 
B) $420,000. 
C) $434,100. 
D) $427,500.

Question 14

All of the following statements regarding impairments are true except

Accepted Answer

A) an impairment is a permanent decline in an asset's market value. 
B) after an impairment write-down, depreciation is generally lower in a subsequent periods. 
C) immediate recognition of impairment write-downs is now required. 
D) impairments are generally recorded when the book value falls below the market value. 
A) an impairment is a permanent decline in an asset's market value. 
B) after an impairment write-down, depreciation is generally lower in a subsequent periods. 
C) immediate recognition of impairment write-downs is now required. 
D) impairments are generally recorded when the book value falls below the market value.

Question 15

Which of the following statements concerning financial statement presentation is false?

Accepted Answer

A) Intangibles are reported separately under Intangible Assets. 
B) The balances of major classes of assets may be disclosed in the footnotes. 
C) The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes. 
D) The balances of all individual assets, as they appear in the subsidiary plant ledger, should be disclosed in the footnotes. 
A) Intangibles are reported separately under Intangible Assets. 
B) The balances of major classes of assets may be disclosed in the footnotes. 
C) The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes. 
D) The balances of all individual assets, as they appear in the subsidiary plant ledger, should be disclosed in the footnotes.

Question 16

The book value of an asset is equal to the

Accepted Answer

A) asset's fair value less its historical cost. 
B) blue book value relied on by secondary markets. 
C) replacement cost of the asset. 
D) asset's cost less accumulated depreciation. 
A) asset's fair value less its historical cost. 
B) blue book value relied on by secondary markets. 
C) replacement cost of the asset. 
D) asset's cost less accumulated depreciation.

Question 17

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

Accepted Answer

A) Salvage value. 
B) Estimated useful life. 
C) Cash needed to replace the plant asset. 
D) Cost. 
A) Salvage value. 
B) Estimated useful life. 
C) Cash needed to replace the plant asset. 
D) Cost.

Question 18

Copyrights are granted by the federal government

Accepted Answer

A) for the life of the creator or 70 years, whichever is longer. 
B) for the life of the creator plus 70 years. 
C) for the life of the creator or 70 years, whichever is shorter. 
D) and therefore cannot be amortized. 
A) for the life of the creator or 70 years, whichever is longer. 
B) for the life of the creator plus 70 years. 
C) for the life of the creator or 70 years, whichever is shorter. 
D) and therefore cannot be amortized.

Question 19

All of the following statements are true regarding the declining-balance method of depreciation except

Accepted Answer

A) the declining-balance method ignores salvage value when calculating depreciation. 
B) the declining-balance method produces lower depreciation expense in the early years as opposed to the later years. 
C) the declining-balance method is compatible with the matching principle. 
D) the declining-balance method is appropriate when assets lose their usefulness rapidly. 
A) the declining-balance method ignores salvage value when calculating depreciation. 
B) the declining-balance method produces lower depreciation expense in the early years as opposed to the later years. 
C) the declining-balance method is compatible with the matching principle. 
D) the declining-balance method is appropriate when assets lose their usefulness rapidly.

Question 20

A machine was purchased for $54,000 and it was estimated to have a $9,000 salvage value at the end of its useful life. Monthly depreciation expense of $600 was recorded using the straight-line method. The annual depreciation rate is

Accepted Answer

A) 20%. 
B) 1.6%. 
C) 12.8%. 
D) 16.0%. 
A) 20%. 
B) 1.6%. 
C) 12.8%. 
D) 16.0%.

Expenditures that add to the utility of plant assets for more than one accounting period are

Which of the following is not properly classified as property, plant, and equipment?

The four subdivisions for plant assets are

Which of the following is not an intangible asset arising from a government grant?

All of the following statements about the useful life factor associated with depreciation are true except

Burke Company purchases land for $180,000 cash. Burke assumes $5,000 in property taxes due on the land. The title and attorney fees totaled $2,000. Burke has the land graded for $4,400. They paid $20,000 for paving of a parking lot. What amount does Burke record as the cost for the land?

Units-of-activity is an appropriate depreciation method to use when

Pearson Company bought a machine on January 1, 2017. The machine cost $180,000 and had an expected salvage value of $30,000. The life of the machine was estimated to be 5 years. The depreciable cost of the machine is

Goodwill is recorded only when there is an exchange transaction that involves the purchase of an entire business.

Whyte Clinic purchases land for $420,000 cash. The clinic assumes $4,500 in property taxes due on the land. The title and attorney fees totaled $3,000. The clinic had the land graded for $6,600. What amount does Whyte Clinic record as the cost for the land?

All of the following statements regarding impairments are true except

Which of the following statements concerning financial statement presentation is false?

The book value of an asset is equal to the

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

Copyrights are granted by the federal government

All of the following statements are true regarding the declining-balance method of depreciation except

A machine was purchased for $54,000 and it was estimated to have a $9,000 salvage value at the end of its useful life. Monthly depreciation expense of $600 was recorded using the straight-line method. The annual depreciation rate is

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 8: Reporting and Analyzing Long-Lived Assets

Expenditures that add to the utility of plant assets for more than one accounting period are

Which of the following is not properly classified as property, plant, and equipment?

The four subdivisions for plant assets are

Which of the following is not an intangible asset arising from a government grant?

All of the following statements about the useful life factor associated with depreciation are true except

Burke Company purchases land for $180,000 cash. Burke assumes $5,000 in property taxes due on the land. The title and attorney fees totaled $2,000. Burke has the land graded for $4,400. They paid $20,000 for paving of a parking lot. What amount does Burke record as the cost for the land?

Units-of-activity is an appropriate depreciation method to use when

Pearson Company bought a machine on January 1, 2017. The machine cost $180,000 and had an expected salvage value of $30,000. The life of the machine was estimated to be 5 years. The depreciable cost of the machine is

Goodwill is recorded only when there is an exchange transaction that involves the purchase of an entire business.

Whyte Clinic purchases land for $420,000 cash. The clinic assumes $4,500 in property taxes due on the land. The title and attorney fees totaled $3,000. The clinic had the land graded for $6,600. What amount does Whyte Clinic record as the cost for the land?

All of the following statements regarding impairments are true except

Which of the following statements concerning financial statement presentation is false?

The book value of an asset is equal to the

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

Copyrights are granted by the federal government

All of the following statements are true regarding the declining-balance method of depreciation except

A machine was purchased for $54,000 and it was estimated to have a $9,000 salvage value at the end of its useful life. Monthly depreciation expense of $600 was recorded using the straight-line method. The annual depreciation rate is

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters