Question 1

Which of the following is not an intangible asset?

Accepted Answer

A)  Goodwill 
B)  Trademark 
C)  Copyright 
D)  Long-term receivable 
A)  Goodwill 
B)  Trademark 
C)  Copyright 
D)  Long-term receivable

Question 2

Losses on discarding fixed assets are _____.

Accepted Answer

A)  opportunity costs 
B)  nonoperating items 
C)  capital expenditures 
D)  accumulated depreciation 
A)  opportunity costs 
B)  nonoperating items 
C)  capital expenditures 
D)  accumulated depreciation

Question 3

Long-lived assets that are intangible in nature, used in the operations of the business, and not held for sale in the ordinary course of business are called fixed assets.

Accepted Answer

A) True 
 B)False

Question 4

Land improvements include:

Accepted Answer

A)  freight. 
B)  surveying fees. 
C)  sales tax. 
D)  outdoor lighting. 
A)  freight. 
B)  surveying fees. 
C)  sales tax. 
D)  outdoor lighting.

Question 5

A machine was purchased for $68,000.It has a useful life of 5 years and a residual value of $8,000.Determine the annual depreciation expense using the straight-line method?

Accepted Answer

A)  $20,000 
B)  $12,000 
C)  $60,000 
D)  $16,000 
A)  $20,000 
B)  $12,000 
C)  $60,000 
D)  $16,000

Question 6

Research and development costs incurred for developing patents are recorded as:

Accepted Answer

A)  current operating expenses. 
B)  long-term operating assets. 
C)  accrued expenses. 
D)  working capital. 
A)  current operating expenses. 
B)  long-term operating assets. 
C)  accrued expenses. 
D)  working capital.

Question 7

A pressurized spray painter was purchased on April 1 of the fiscal year for $3,900.It has a useful life of 4 years and a residual value of $300.Determine depreciation expense for the first two years, assuming a fiscal year end of December 31 and using (a) the straight-line method and (b) the double-declining-balance method.

Accepted Answer

(a)Straight-line method
Year 1: $675; ($

Question 8

The balance in Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is the effect on a company's liquidity and profitability metrics when it purchases a piece of equipment? ​

Accepted Answer

A)  ​Its free cash flow decreases. 
B)  ​Its free cash flow increases. 
C)  ​Its asset turnover increases. 
D)  ​Its asset turnover remains unaffected. 
A)  ​Its free cash flow decreases. 
B)  ​Its free cash flow increases. 
C)  ​Its asset turnover increases. 
D)  ​Its asset turnover remains unaffected.

Question 10

To measure depreciation, which of the following must be known?

Accepted Answer

A)  market value of asset. 
B)  fixed asset turnover 
C)  cost of asset. 
D)  the amount of cash to replace fixed asset 
A)  market value of asset. 
B)  fixed asset turnover 
C)  cost of asset. 
D)  the amount of cash to replace fixed asset

Question 11

A patent was purchased for $585,000 with a legal life of 20 years.Management estimates that the patent has a 12-year economic life.The entry to record amortization would include:

Accepted Answer

A)  an increase in amortization expense for $29,250. 
B)  an increase in research and development expense for $585,000. 
C)  a decrease in patent for $48,750. 
D)  an increase in accumulated amortization for $585,000. 
A)  an increase in amortization expense for $29,250. 
B)  an increase in research and development expense for $585,000. 
C)  a decrease in patent for $48,750. 
D)  an increase in accumulated amortization for $585,000.

Question 12

A company acquired mineral rights for $7,500,000.The mineral deposit is estimated at 600,000 tons and during the year 100,000 tons were extracted and sold.
(a)Calculate depletion expense for the year.
(b)Show the effects of (a) on the accounts and the financial statements of the company.
(c)What is the book value of the mineral rights at the end of the current year?

Accepted Answer

(a)$1,250,000 = 100,000 × ($7,500,000 /

Question 13

The total depreciation across the years of an asset's life is the same under the double-declining-balance method or the straight-line method.

Accepted Answer

A) True 
 B)False

Question 14

_____ is an example of a fixed asset.

Accepted Answer

A)  A machine 
B)  A prepaid expense 
C)  Land held for investment 
D)  An accrued revenue 
A)  A machine 
B)  A prepaid expense 
C)  Land held for investment 
D)  An accrued revenue

Question 15

Which of the following is a characteristic of accumulated depreciation account?

Accepted Answer

A)  Accumulated depreciation represents cash reserved for asset replacement. 
B)  Accumulated depreciation account is a contra-liability account. 
C)  Accumulated depreciation may be disclosed in the notes to the income statement. 
D)  Accumulated depreciation is reported on the balance sheet as a deduction from the cost of the asset. 
A)  Accumulated depreciation represents cash reserved for asset replacement. 
B)  Accumulated depreciation account is a contra-liability account. 
C)  Accumulated depreciation may be disclosed in the notes to the income statement. 
D)  Accumulated depreciation is reported on the balance sheet as a deduction from the cost of the asset.

Question 16

Paleota Company purchased a patent from Finise for $234,000.At the time of purchase, the patent had a remaining useful life of 10 years.Determine the patent amortization expense for the first year.

Accepted Answer

A)  $23,400 
B)  $23,000 
C)  $14,000 
D)  $9,800 
A)  $23,400 
B)  $23,000 
C)  $14,000 
D)  $9,800

Question 17

Fixed assets are ordinarily presented on the balance sheet:

Accepted Answer

A)  at its current market value. 
B)  at its replacement cost. 
C)  at its cost less accumulated depreciation. 
D)  under intangible assets. 
A)  at its current market value. 
B)  at its replacement cost. 
C)  at its cost less accumulated depreciation. 
D)  under intangible assets.

Question 18

Intangible assets do not exist physically.

Accepted Answer

A) True 
 B)False

Question 19

If a revenue expenditure is treated as a capital expenditure, then:

Accepted Answer

A)  expenses are overstated and owners' equity is understated. 
B)  expenses are overstated and assets are overstated. 
C)  expenses are understated and owners' equity is overstated. 
D)  net income is overstated and owners' equity is understated. 
A)  expenses are overstated and owners' equity is understated. 
B)  expenses are overstated and assets are overstated. 
C)  expenses are understated and owners' equity is overstated. 
D)  net income is overstated and owners' equity is understated.

Question 20

_____ occurs due to obsolescence that causes an asset to no longer provide services for which it was intended.

Accepted Answer

A)  Physical depreciation 
B)  Effective depreciation 
C)  Accelerated depreciation 
D)  Functional depreciation 
A)  Physical depreciation 
B)  Effective depreciation 
C)  Accelerated depreciation 
D)  Functional depreciation

Which of the following is not an intangible asset?

Losses on discarding fixed assets are _____.

Long-lived assets that are intangible in nature, used in the operations of the business, and not held for sale in the ordinary course of business are called fixed assets.

Land improvements include:

A machine was purchased for $68,000.It has a useful life of 5 years and a residual value of $8,000.Determine the annual depreciation expense using the straight-line method?

Research and development costs incurred for developing patents are recorded as:

The balance in Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.

Which of the following is the effect on a company's liquidity and profitability metrics when it purchases a piece of equipment?

To measure depreciation, which of the following must be known?

A patent was purchased for $585,000 with a legal life of 20 years.Management estimates that the patent has a 12-year economic life.The entry to record amortization would include:

The total depreciation across the years of an asset's life is the same under the double-declining-balance method or the straight-line method.

_____ is an example of a fixed asset.

Which of the following is a characteristic of accumulated depreciation account?

Paleota Company purchased a patent from Finise for $234,000.At the time of purchase, the patent had a remaining useful life of 10 years.Determine the patent amortization expense for the first year.

Fixed assets are ordinarily presented on the balance sheet:

Intangible assets do not exist physically.

If a revenue expenditure is treated as a capital expenditure, then:

_____ occurs due to obsolescence that causes an asset to no longer provide services for which it was intended.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 7: Fixed Assets, Natural Resources, and Intangible Assets

Which of the following is not an intangible asset?

Losses on discarding fixed assets are _____.

Long-lived assets that are intangible in nature, used in the operations of the business, and not held for sale in the ordinary course of business are called fixed assets.

Land improvements include:

A machine was purchased for $68,000.It has a useful life of 5 years and a residual value of $8,000.Determine the annual depreciation expense using the straight-line method?

Research and development costs incurred for developing patents are recorded as:

The balance in Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.

Which of the following is the effect on a company's liquidity and profitability metrics when it purchases a piece of equipment? ​

To measure depreciation, which of the following must be known?

A patent was purchased for $585,000 with a legal life of 20 years.Management estimates that the patent has a 12-year economic life.The entry to record amortization would include:

The total depreciation across the years of an asset's life is the same under the double-declining-balance method or the straight-line method.

_____ is an example of a fixed asset.

Which of the following is a characteristic of accumulated depreciation account?

Paleota Company purchased a patent from Finise for $234,000.At the time of purchase, the patent had a remaining useful life of 10 years.Determine the patent amortization expense for the first year.

Fixed assets are ordinarily presented on the balance sheet:

Intangible assets do not exist physically.

If a revenue expenditure is treated as a capital expenditure, then:

_____ occurs due to obsolescence that causes an asset to no longer provide services for which it was intended.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Which of the following is the effect on a company's liquidity and profitability metrics when it purchases a piece of equipment?