Question 1

Which of the following statements regarding impairment is correct?

Accepted Answer

A)  Asset impairment losses are a regular operating expense of most businesses. 
B)  When a company records an asset impairment loss, it will increase net income for that period. 
C)  The accounting for impairment losses is an application of the cost principle. 
D)  Asset impairment losses are reported on the income statement as an operating expense. 
A)  Asset impairment losses are a regular operating expense of most businesses. 
B)  When a company records an asset impairment loss, it will increase net income for that period. 
C)  The accounting for impairment losses is an application of the cost principle. 
D)  Asset impairment losses are reported on the income statement as an operating expense.

Question 2

The fixed asset turnover is the

Accepted Answer

A)  number of sales dollars generated by each dollar of total assets. 
B)  rate at which inventories are being rotated. 
C)  number of dollars in notes payable generated by each dollar in fixed assets. 
D)  number of sales dollars generated by each dollar of fixed assets. 
A)  number of sales dollars generated by each dollar of total assets. 
B)  rate at which inventories are being rotated. 
C)  number of dollars in notes payable generated by each dollar in fixed assets. 
D)  number of sales dollars generated by each dollar of fixed assets.

Question 3

The balance sheet category "intangible assets" includes

Accepted Answer

A)  Patents, trademarks, and franchises 
B)  Equipment, land, and buildings 
C)  Investments, receivables, and cash 
D)  Goodwill, inventory, and vehicles 
A)  Patents, trademarks, and franchises 
B)  Equipment, land, and buildings 
C)  Investments, receivables, and cash 
D)  Goodwill, inventory, and vehicles

Question 4

The exclusive right to use a certain name or symbol is called a trademark.

Accepted Answer

A) True 
 B)False

Question 5

The net amount shown on a balance sheet for an intangible asset with an unlimited life should be:

Accepted Answer

A)  the price for which it could be sold. 
B)  its acquisition cost or current market value, whichever is lower. 
C)  its purchase price minus accumulated amortization. 
D)  its purchase price adjusted for inflation. 
A)  the price for which it could be sold. 
B)  its acquisition cost or current market value, whichever is lower. 
C)  its purchase price minus accumulated amortization. 
D)  its purchase price adjusted for inflation.

Question 6

Assuming two companies use the same accounting methods, other things being equal, the company with a higher fixed asset turnover ratio:

Accepted Answer

A)  has a greater amount invested in fixed assets than a company with a lower fixed asset turnover ratio. 
B)  has less invested in fixed assets than a company with a lower fixed asset turnover ratio. 
C)  generates less sales revenue than a company with a lower fixed asset turnover ratio. 
D)  makes better use of its fixed assets to generate revenues than a company with a lower fixed asset turnover 
A)  has a greater amount invested in fixed assets than a company with a lower fixed asset turnover ratio. 
B)  has less invested in fixed assets than a company with a lower fixed asset turnover ratio. 
C)  generates less sales revenue than a company with a lower fixed asset turnover ratio. 
D)  makes better use of its fixed assets to generate revenues than a company with a lower fixed asset turnover

Question 7

The periodic allocation of a natural resource's cost over the period of its extraction or harvesting is called amortization.

Accepted Answer

A) True 
 B)False

Question 8

A company purchased 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 residual value of the land is estimated to be $250,000. What is the amount of depletion per ton of ore?

Accepted Answer

A)  $0.75 
B)  $0.875 
C)  
C) $1.14 
D)  $0.625 
A)  $0.75 
B)  $0.875 
C)  
C) $1.14 
D)  $0.625

Question 9

One difference between the double-declining-balance method and the straight-line method is that the double-declining-balance method:

Accepted Answer

A)  takes book value below residual value. 
B)  does not consider the useful life of the asset in the calculation of depreciation. 
C)  cannot be used for tax purposes. 
D)  uses book value instead of depreciable cost in the calculation of depreciation. 
A)  takes book value below residual value. 
B)  does not consider the useful life of the asset in the calculation of depreciation. 
C)  cannot be used for tax purposes. 
D)  uses book value instead of depreciable cost in the calculation of depreciation.

Question 10

Some analysts compare companies by focusing on earnings before interest, taxes, depreciation, and amortization (EBITDA).

Accepted Answer

A) True 
 B)False

Question 11

Darin Company purchased a truck and trailer for $54,000. The appraised values of the truck and trailer are $19,000 and $38,000, respectively. What is the amount of the cost that should be assigned to the truck?

Accepted Answer

A)  $19,000 
B)  $18,000 
C)  $16,000 
D)  $22,000 
A)  $19,000 
B)  $18,000 
C)  $16,000 
D)  $22,000

Question 12

What is the depreciation expense for 2011?

Accepted Answer

A)  $4,000. 
B)  $3,000. 
C)  $6,000. 
D)  $8,000. 
A)  $4,000. 
B)  $3,000. 
C)  $6,000. 
D)  $8,000.

Question 13

On September 1, a company purchased a vehicle for $23,000 with a residual value of $3,000. The estimated useful life is 5 years and the company uses the straight-line method. What is the depreciation expense for the year ended December 31?

Accepted Answer

A)  $1,333 
B)  $1,000 
C)  $4,000 
D)  $1,533 
A)  $1,333 
B)  $1,000 
C)  $4,000 
D)  $1,533

Question 14

An asset is purchased on January 1 for $40,000. It is expected to have a useful life of five years after which it will have an expected salvage value of $5,000. The company uses the straight -line method. If it is sold for $30,000 exactly two years after its purchased, the company will record a:

Accepted Answer

A)  gain of $6,000. 
B)  gain of $4,000. 
C)  loss of $4,000. 
D)  loss of $6,000. 
A)  gain of $6,000. 
B)  gain of $4,000. 
C)  loss of $4,000. 
D)  loss of $6,000.

Question 15

A trucking company sold its fleet of trucks for $55,000. The trucks had originally cost $1,410,000 and had accumulated depreciation of $1,269,000 through the date of disposal. What gain or loss did the trucking company record when it sold the fleet of trucks?

Accepted Answer

A)  Gain of $86,000. 
B)  Gain of $55,000. 
C)  Loss of $55,000. 
D)  Loss of $86,000. 
A)  Gain of $86,000. 
B)  Gain of $55,000. 
C)  Loss of $55,000. 
D)  Loss of $86,000.

Question 16

Your company rents out computers to local businesses and schools. You have 1,000 computers with a net book value of $160,000. As a result of changing technology, your computers are more difficult to rent so you must severely reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $125,000 because of their outdated technology. Your company should report an asset impairment loss of:

Accepted Answer

A)  $160,000. 
B)  $125,000. 
C)  $35,000. 
D)  $0 
A)  $160,000. 
B)  $125,000. 
C)  $35,000. 
D)  $0

Question 17

Purrfect Pets has a facility that originally cost $375,000. The balance of the accumulated depreciation account for the facility is $258,000. The company expects to be able to sell the facility for $107,000 at the end of its useful life. The residual value of the facility is:

Accepted Answer

A)  $117,000. 
B)  $151,000. 
C)  $268,000. 
D)  $107,000 
A)  $117,000. 
B)  $151,000. 
C)  $268,000. 
D)  $107,000

Question 18

A machine is purchased on January 1, 2011, for $90,000. It is expected to have a useful life of five years and a residual value of $5,000. The company closes its books on December 31. Under the double-declining balance method, what is the total amount of depreciation to be expensed during the 2012 fiscal year (year 2 of 5)?

Accepted Answer

A)  $21,600 
B)  $22,000 
C)  $22,400 
D)  $34,000 
A)  $21,600 
B)  $22,000 
C)  $22,400 
D)  $34,000

Question 19

If a truck's engine is overhauled for $8,000, the journal entry would normally include a debit to

Accepted Answer

A)  Truck 
B)  Accounts Payable 
C)  Depreciation Expense 
D)  Cash 
A)  Truck 
B)  Accounts Payable 
C)  Depreciation Expense 
D)  Cash

Question 20

The Widget Tool and Die Company buys a $400,000 stamping machine that has an estimated residual value of $20,000. The company expects the machine to produce two million units. It makes 400,000 units during the current period. If the units-of-production method is used, the depreciation rate is:

Accepted Answer

A)  $0.95 per unit. 
B)  $0.19 per unit. 
C)  $0.05 per unit. 
D)  $1.00 per unit. 
A)  $0.95 per unit. 
B)  $0.19 per unit. 
C)  $0.05 per unit. 
D)  $1.00 per unit.

Which of the following statements regarding impairment is correct?

The fixed asset turnover is the

The balance sheet category "intangible assets" includes

The exclusive right to use a certain name or symbol is called a trademark.

The net amount shown on a balance sheet for an intangible asset with an unlimited life should be:

Assuming two companies use the same accounting methods, other things being equal, the company with a higher fixed asset turnover ratio:

The periodic allocation of a natural resource's cost over the period of its extraction or harvesting is called amortization.

A company purchased 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 residual value of the land is estimated to be $250,000. What is the amount of depletion per ton of ore?

One difference between the double-declining-balance method and the straight-line method is that the double-declining-balance method:

Some analysts compare companies by focusing on earnings before interest, taxes, depreciation, and amortization (EBITDA).

Darin Company purchased a truck and trailer for $54,000. The appraised values of the truck and trailer are $19,000 and $38,000, respectively. What is the amount of the cost that should be assigned to the truck?

What is the depreciation expense for 2011?

On September 1, a company purchased a vehicle for $23,000 with a residual value of $3,000. The estimated useful life is 5 years and the company uses the straight-line method. What is the depreciation expense for the year ended December 31?

An asset is purchased on January 1 for $40,000. It is expected to have a useful life of five years after which it will have an expected salvage value of $5,000. The company uses the straight -line method. If it is sold for $30,000 exactly two years after its purchased, the company will record a:

A trucking company sold its fleet of trucks for $55,000. The trucks had originally cost $1,410,000 and had accumulated depreciation of $1,269,000 through the date of disposal. What gain or loss did the trucking company record when it sold the fleet of trucks?

Purrfect Pets has a facility that originally cost $375,000. The balance of the accumulated depreciation account for the facility is $258,000. The company expects to be able to sell the facility for $107,000 at the end of its useful life. The residual value of the facility is:

If a truck's engine is overhauled for $8,000, the journal entry would normally include a debit to

The Widget Tool and Die Company buys a $400,000 stamping machine that has an estimated residual value of $20,000. The company expects the machine to produce two million units. It makes 400,000 units during the current period. If the units-of-production method is used, the depreciation rate is:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Which of the following statements regarding impairment is correct?

The fixed asset turnover is the

The balance sheet category "intangible assets" includes

The exclusive right to use a certain name or symbol is called a trademark.

The net amount shown on a balance sheet for an intangible asset with an unlimited life should be:

Assuming two companies use the same accounting methods, other things being equal, the company with a higher fixed asset turnover ratio:

The periodic allocation of a natural resource's cost over the period of its extraction or harvesting is called amortization.

A company purchased 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 residual value of the land is estimated to be $250,000. What is the amount of depletion per ton of ore?

One difference between the double-declining-balance method and the straight-line method is that the double-declining-balance method:

Some analysts compare companies by focusing on earnings before interest, taxes, depreciation, and amortization (EBITDA).

Darin Company purchased a truck and trailer for $54,000. The appraised values of the truck and trailer are $19,000 and $38,000, respectively. What is the amount of the cost that should be assigned to the truck?

What is the depreciation expense for 2011?

On September 1, a company purchased a vehicle for $23,000 with a residual value of $3,000. The estimated useful life is 5 years and the company uses the straight-line method. What is the depreciation expense for the year ended December 31?

An asset is purchased on January 1 for $40,000. It is expected to have a useful life of five years after which it will have an expected salvage value of $5,000. The company uses the straight -line method. If it is sold for $30,000 exactly two years after its purchased, the company will record a:

A trucking company sold its fleet of trucks for $55,000. The trucks had originally cost $1,410,000 and had accumulated depreciation of $1,269,000 through the date of disposal. What gain or loss did the trucking company record when it sold the fleet of trucks?

Purrfect Pets has a facility that originally cost $375,000. The balance of the accumulated depreciation account for the facility is $258,000. The company expects to be able to sell the facility for $107,000 at the end of its useful life. The residual value of the facility is:

If a truck's engine is overhauled for $8,000, the journal entry would normally include a debit to

The Widget Tool and Die Company buys a $400,000 stamping machine that has an estimated residual value of $20,000. The company expects the machine to produce two million units. It makes 400,000 units during the current period. If the units-of-production method is used, the depreciation rate is:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters