Question 1

The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be

Accepted Answer

A)  Office Supplies 975
Accounts Payable 975 
B)  Office Equipment 975
Accounts Payable 975 
C)  Office Supplies 975
Accounts Receivable 975 
D)  Office Equipment 975
Accounts Receivable 975 
A)  Office Supplies 975
Accounts Payable 975 
B)  Office Equipment 975
Accounts Payable 975 
C)  Office Supplies 975
Accounts Receivable 975 
D)  Office Equipment 975
Accounts Receivable 975

Question 2

When a property, plant, and equipment asset is sold for cash, any gain or loss on the asset sold should be recorded.

Accepted Answer

A) True 
 B)False

Question 3

The method used to calculate the depletion of a natural resource is the straight-line method.

Accepted Answer

A) True 
 B)False

Question 4

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the

Accepted Answer

A)  units-of-production method 
B)  double-declining-balance method 
C)  straight-line method 
D)  time-valuation method 
A)  units-of-production method 
B)  double-declining-balance method 
C)  straight-line method 
D)  time-valuation method

Question 5

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

Accepted Answer

A)  cleaning the carpet in the front room 
B)  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 room 
B)  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 6

Costs associated with normal research and development activities should be treated as intangible assets.

Accepted Answer

A) True 
 B)False

Question 7

Classify each of the following costs associated with long-lived assets as one of the following:
-Interest on money borrowed to finance construction of new office building

Accepted Answer

A) Buildings 
B) Machinery and equipment 
C) Land 
D) Land improvements 
A) Buildings 
B) Machinery and equipment 
C) Land 
D) Land improvements

Question 8

Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated using the straight-line method based on an estimated useful life of six years and an estimated residual value of $7,500.
(a)What was the depreciation expense for the first year?
(b)Assuming the equipment was sold at the end of the second year for $59,000, determine the gain or loss on sale of the equipment.
(c)Journalize the entry to record the sale.

Accepted Answer

(a) $11,250 [ (Cost - Residual Value)/Us

Question 9

XYZ Co. incurred the following costs related to the office building used in operating its sports supply company:
(a)Replaced a broken window.
(b)Replaced the roof that had been on the building 23 years.
(c)Serviced all the air conditioners before summer started.
(d)Replaced the air conditioners in the customer service areas.
(e)Added a warehouse to the back of the building.
(f)Repainted the interior walls.
(g)Installed window shutters on all windows.​Classify each of the costs as a capital expenditure or a revenue expenditure.

Accepted Answer

(a) Revenue expenditure
(b) Ca

Question 10

On December 31, Strike Company sold one of its batting cages for $20,000. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

Accepted Answer

A)  gain of $20,000 
B)  gain of $30,000 
C)  loss of $20,000 
D)  loss of $30,000 
A)  gain of $20,000 
B)  gain of $30,000 
C)  loss of $20,000 
D)  loss of $30,000

Question 11

Classify each of the following costs associated with long-lived assets as one of the following:
-Fences around land at new business location

Accepted Answer

A) Land improvements 
B) Buildings 
C) Land 
D) Machinery and equipment 
A) Land improvements 
B) Buildings 
C) Land 
D) Machinery and equipment

Question 12

A characteristic of a fixed asset is that it is

Accepted Answer

A)  intangible 
B)  used in the operations of a business 
C)  held for sale in the ordinary course of the business 
D)  a short-term investment 
A)  intangible 
B)  used in the operations of a business 
C)  held for sale in the ordinary course of the business 
D)  a short-term investment

Question 13

A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of three years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second year by the straight-line method. Round your answers to the nearest whole dollar.

Accepted Answer

Straight-Line Depreciation =  (Cost - Es

Question 14

Which of the following is true?

Accepted Answer

A)  If using the double-declining-balance method, the total amount of depreciation expense during the life of the asset will be the highest. 
B)  If using the units-of-activity method, it is possible to depreciate more than the depreciable cost. 
C)  If using the straight-line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance. 
D)  Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same. 
A)  If using the double-declining-balance method, the total amount of depreciation expense during the life of the asset will be the highest. 
B)  If using the units-of-activity method, it is possible to depreciate more than the depreciable cost. 
C)  If using the straight-line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance. 
D)  Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.

Question 15

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

Accepted Answer

A) True 
 B)False

Question 16

When a company sells machinery at a price equal to its book value, this transaction would be recorded as a

Accepted Answer

A)  debit to Cash and Accumulated Depreciation and a credit to Machinery 
B)  debit to Machinery and a credit to Cash and Accumulated Depreciation 
C)  debit to Cash and Machinery and a credit to Accumulated Depreciation 
D)  debit to Cash and Depreciation Expense and a credit to Accumulated Depreciation 
A)  debit to Cash and Accumulated Depreciation and a credit to Machinery 
B)  debit to Machinery and a credit to Cash and Accumulated Depreciation 
C)  debit to Cash and Machinery and a credit to Accumulated Depreciation 
D)  debit to Cash and Depreciation Expense and a credit to Accumulated Depreciation

Question 17

The double-declining-balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used under the double-declining-balance method.

Accepted Answer

The answer of The double-declining-balance rate for calculating depreciation expense...

Question 18

Classify each of the following as:
-Fixing damage due to a car accident

Accepted Answer

A) Ordinary maintenance and repairs 
B) Asset improvements 
C) Extraordinary repairs 
A) Ordinary maintenance and repairs 
B) Asset improvements 
C) Extraordinary repairs

Question 19

Classify each of the following costs associated with long-lived assets as one of the following:
-Purchase price of land purchased for new business site

Accepted Answer

A) Buildings 
B) Machinery and equipment 
C) Land 
D) Land improvements 
A) Buildings 
B) Machinery and equipment 
C) Land 
D) Land improvements

Question 20

A tangible asset is one that lacks physical existence.

Accepted Answer

A) True 
 B)False

Exam 10: Long-Term Assets: Fixed and Intangible

The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be

When a property, plant, and equipment asset is sold for cash, any gain or loss on the asset sold should be recorded.

The method used to calculate the depletion of a natural resource is the straight-line method.

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the

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

Costs associated with normal research and development activities should be treated as intangible assets.

Classify each of the following costs associated with long-lived assets as one of the following: -Interest on money borrowed to finance construction of new office building

On December 31, Strike Company sold one of its batting cages for $20,000. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

Classify each of the following costs associated with long-lived assets as one of the following: -Fences around land at new business location

A characteristic of a fixed asset is that it is

A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of three years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second year by the straight-line method. Round your answers to the nearest whole dollar.

Which of the following is true?

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

When a company sells machinery at a price equal to its book value, this transaction would be recorded as a

The double-declining-balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used under the double-declining-balance method.

Classify each of the following as: -Fixing damage due to a car accident

Classify each of the following costs associated with long-lived assets as one of the following: -Purchase price of land purchased for new business site

A tangible asset is one that lacks physical existence.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

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