Question 1

Which of the following is an example of a capital expenditure?

Accepted Answer

A)  Cleaning the carpet in the front-office room 
B)  Regular tune-up for a company truck 
C)  Replacing an engine in a company car 
D)  Replacing all burned-out light bulbs in the factory 
A)  Cleaning the carpet in the front-office room 
B)  Regular tune-up for a company truck 
C)  Replacing an engine in a company car 
D)  Replacing all burned-out light bulbs in the factory

Question 2

The cost of removal of an old building to make the land ready for its intended use is charged to:

Accepted Answer

A)  land. 
B)  land improvements. 
C)  buildings. 
D)  operating expenses. 
A)  land. 
B)  land improvements. 
C)  buildings. 
D)  operating expenses.

Question 3

A fixed asset with a cost of $15,000 and accumulated depreciation of $12,500 is sold for $1,750.What is the amount of gain or loss on disposal of the fixed asset?

Accepted Answer

A)  $750 loss 
B)  $2,500 loss 
C)  $2,500 gain 
D)  $750 gain 
A)  $750 loss 
B)  $2,500 loss 
C)  $2,500 gain 
D)  $750 gain

Question 4

Which of the following is considered under the straight-line method but not under double-declining-balance method?

Accepted Answer

A)  The asset's book value 
B)  The asset's salvage value 
C)  The asset's expected useful life 
D)  The asset's initial cost 
A)  The asset's book value 
B)  The asset's salvage value 
C)  The asset's expected useful life 
D)  The asset's initial cost

Question 5

A(n) _____ is a contract for the use of an asset for a period of time without having to buy the asset.

Accepted Answer

A)  indenture 
B)  depreciation hedge 
C)  revenue option 
D)  lease 
A)  indenture 
B)  depreciation hedge 
C)  revenue option 
D)  lease

Question 6

Expenditures made to extend an asset's life are called revenue expenditures.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  franchise. 
B)  patent. 
C)  trademark. 
D)  copyright. 
A)  franchise. 
B)  patent. 
C)  trademark. 
D)  copyright.

Question 8

The cost incurred to extend an asset's useful life is recorded as:

Accepted Answer

A)  accrued expenditures. 
B)  maintenance expenditures. 
C)  routine expenditures. 
D)  capital expenditures. 
A)  accrued expenditures. 
B)  maintenance expenditures. 
C)  routine expenditures. 
D)  capital expenditures.

Question 9

Which method of depreciation considers residual value in computing the normal periodic depreciation?

Accepted Answer

A)  Straight-line 
B)  MACRS 
C)  Double-declining-balance 
D)  Accelerated 
A)  Straight-line 
B)  MACRS 
C)  Double-declining-balance 
D)  Accelerated

Question 10

On September 1, a machine was purchased for $47,000 with a useful life of 8 years, and a residual value of $3,000.What is the depreciation expense in the year of purchase under straight-line method, assuming a December 31 year-end?

Accepted Answer

A)  $3,917 
B)  $3,667 
C)  $1,958 
D)  $1,833 
A)  $3,917 
B)  $3,667 
C)  $1,958 
D)  $1,833

Question 11

A company purchased a photocopy machine for $16,000.It has a useful life of 4 years and a residual value of $1,000.Compute depreciation for the second year under each of the following methods: (a) straight-line and (b) double-declining-balance.

Accepted Answer

a. $3,750 ($16,000 -

Question 12

Determine the cost of the land, based on the following data. $\begin{array}{lr}
\text {Land purchase price }&\$90,000\
\text { Broker's commission}&7,500\
\text {Payment for the demolition and removal of existing building }&2,500\
\text {Cash received from the sale of materials salvaged from the demolished buil ding }&500\
\end{array}$

Accepted Answer

$99,500; (

Question 13

Under the straight-line method, the amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000, and a useful life of 5 years, will be $18,000.

Accepted Answer

A) True 
 B)False

Question 14

When natural resources are used, the _____ expense account is increased for a portion of the cost of resources removed.

Accepted Answer

A)  depletion. 
B)  deferral. 
C)  prepaid 
D)  amortization. 
A)  depletion. 
B)  deferral. 
C)  prepaid 
D)  amortization.

Question 15

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000, and an estimated useful life of 5 years.Determine the second year's depreciation expense using the straight-line method.

Accepted Answer

A)  $10,200 
B)  $22,400 
C)  $11,200 
D)  $12,200 
A)  $10,200 
B)  $22,400 
C)  $11,200 
D)  $12,200

Question 16

Goodwill refers to the excess of purchase price of a business over the fair value of its net assets.

Accepted Answer

A) True 
 B)False

Which of the following is an example of a capital expenditure?

The cost of removal of an old building to make the land ready for its intended use is charged to:

A fixed asset with a cost of $15,000 and accumulated depreciation of $12,500 is sold for $1,750.What is the amount of gain or loss on disposal of the fixed asset?

Which of the following is considered under the straight-line method but not under double-declining-balance method?

A(n) _____ is a contract for the use of an asset for a period of time without having to buy the asset.

Expenditures made to extend an asset's life are called revenue expenditures.

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

The cost incurred to extend an asset's useful life is recorded as:

Which method of depreciation considers residual value in computing the normal periodic depreciation?

On September 1, a machine was purchased for $47,000 with a useful life of 8 years, and a residual value of $3,000.What is the depreciation expense in the year of purchase under straight-line method, assuming a December 31 year-end?

A company purchased a photocopy machine for $16,000.It has a useful life of 4 years and a residual value of $1,000.Compute depreciation for the second year under each of the following methods: (a) straight-line and (b) double-declining-balance.

Determine the cost of the land, based on the following data. Land purchase price \9 0,000 Broker's commission 7,500 Payment for the demolition and removal of existing building 2,500 Cash received from the sale of materials salvaged from the demolished buil ding 500

Under the straight-line method, the amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000, and a useful life of 5 years, will be $18,000.

When natural resources are used, the _____ expense account is increased for a portion of the cost of resources removed.

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000, and an estimated useful life of 5 years.Determine the second year's depreciation expense using the straight-line method.

Goodwill refers to the excess of purchase price of a business over the fair value of its net assets.

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

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

Which of the following is an example of a capital expenditure?

The cost of removal of an old building to make the land ready for its intended use is charged to:

A fixed asset with a cost of $15,000 and accumulated depreciation of $12,500 is sold for $1,750.What is the amount of gain or loss on disposal of the fixed asset?

Which of the following is considered under the straight-line method but not under double-declining-balance method?

A(n) _____ is a contract for the use of an asset for a period of time without having to buy the asset.

Expenditures made to extend an asset's life are called revenue expenditures.

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

The cost incurred to extend an asset's useful life is recorded as:

Which method of depreciation considers residual value in computing the normal periodic depreciation?

On September 1, a machine was purchased for $47,000 with a useful life of 8 years, and a residual value of $3,000.What is the depreciation expense in the year of purchase under straight-line method, assuming a December 31 year-end?

A company purchased a photocopy machine for $16,000.It has a useful life of 4 years and a residual value of $1,000.Compute depreciation for the second year under each of the following methods: (a) straight-line and (b) double-declining-balance.

Determine the cost of the land, based on the following data. Land purchase price \9 0,000 Broker's commission 7,500 Payment for the demolition and removal of existing building 2,500 Cash received from the sale of materials salvaged from the demolished buil ding 500

Under the straight-line method, the amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000, and a useful life of 5 years, will be $18,000.

When natural resources are used, the _____ expense account is increased for a portion of the cost of resources removed.

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000, and an estimated useful life of 5 years.Determine the second year's depreciation expense using the straight-line method.

Goodwill refers to the excess of purchase price of a business over the fair value of its net assets.

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