Question 1

The cost of a long-term asset is expensed

Accepted Answer

A) when it is paid for. 
B) as the asset benefits the company. 
C) in the period in which it is acquired. 
D) in the period in which it is disposed of. 
A) when it is paid for. 
B) as the asset benefits the company. 
C) in the period in which it is acquired. 
D) in the period in which it is disposed of.

Question 2

Carpino Company purchased equipment and these costs were incurred:   What amount should be recorded as the cost of the equipment?

Accepted Answer

A) $75,000 
B) $78,500 
C) $79,250 
D) $80,750 
A) $75,000 
B) $78,500 
C) $79,250 
D) $80,750

Question 3

All the following are needed for the computation of depreciation except

Accepted Answer

A) training costs of manufacturing personnel. 
B) cost. 
C) salvage value. 
D) estimated useful life. 
A) training costs of manufacturing personnel. 
B) cost. 
C) salvage value. 
D) estimated useful life.

Question 4

A machine was purchased for $180,000 and it was estimated to have a $12,000 salvage value at the end of its useful life.Monthly depreciation expense of $1,750 was recorded using the straight-line method.The annual depreciation rate is

Accepted Answer

A) 15.0%. 
B) 2.5%. 
C) 10.0%. 
D) 12.5%. 
A) 15.0%. 
B) 2.5%. 
C) 10.0%. 
D) 12.5%.

Question 5

Goodwill can be recorded

Accepted Answer

A) when customers keep returning because they are satisfied with the company's products. 
B) when the company acquires a good location for its business. 
C) when the company has exceptional management. 
D) only when there is an exchange transaction involving the purchase of an entire business. 
A) when customers keep returning because they are satisfied with the company's products. 
B) when the company acquires a good location for its business. 
C) when the company has exceptional management. 
D) only when there is an exchange transaction involving the purchase of an entire business.

Question 6

A permanent decline in the market value of an asset is referred to as an impairment.

Accepted Answer

A) True 
 B)False

Question 7

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 8

National Molding is building a new plant that will take three years to construct.The construction will be financed in part by funds borrowed during the construction period.There are significant architect fees, excavation fees, and building permit fees.Which of the following statements is true?

Accepted Answer

A) Excavation fees are capitalized but building permit fees are not. 
B) Architect fees are capitalized but building permit fees are not. 
C) Interest is capitalized during the construction as part of the cost of the building. 
D) The capitalized cost is equal to the contract price to build the plant less any interest on borrowed funds. 
A) Excavation fees are capitalized but building permit fees are not. 
B) Architect fees are capitalized but building permit fees are not. 
C) Interest is capitalized during the construction as part of the cost of the building. 
D) The capitalized cost is equal to the contract price to build the plant less any interest on borrowed funds.

Question 9

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 10

Interline Trucking purchased a tractor trailer for $112,000.Interline uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1,000,000 miles over its 12-year useful life.Salvage value is estimated to be $16,000.If the truck is driven 80,000 miles in its first year, how much depreciation expense should Interline record?

Accepted Answer

A) $7,110 
B) $8,960 
C) $7,680 
D) $8,296 
A) $7,110 
B) $8,960 
C) $7,680 
D) $8,296

Question 11

The following information is provided for Nguyen Company and Northwest Corporation.   What is Northwest's asset turnover for 2022?

Accepted Answer

A) 1.40 times 
B) 1.63 times 
C) 1.81 times 
D) 1.23 times 
A) 1.40 times 
B) 1.63 times 
C) 1.81 times 
D) 1.23 times

Question 12

If a plant asset is retired and is fully depreciated,

Accepted Answer

A) a gain on disposal will be recorded. 
B) phantom depreciation must be taken as though the asset were still on the books. 
C) a loss on disposal will be recorded. 
D) no gain or loss on disposal will be recorded. 
A) a gain on disposal will be recorded. 
B) phantom depreciation must be taken as though the asset were still on the books. 
C) a loss on disposal will be recorded. 
D) no gain or loss on disposal will be recorded.

Question 13

Newell Company purchased a machine with a list price of $160,000.They were given a 10% discount by the manufacturer.They paid $1,000 for shipping and sales tax of $7,500.Newell estimates that the machine will have a useful life of 10 years and a salvage value of $50,000.If Newell uses straight-line depreciation, annual depreciation will be

Accepted Answer

A) $10,250. 
B) $10,180. 
C) $15,250. 
D) $9,400. 
A) $10,250. 
B) $10,180. 
C) $15,250. 
D) $9,400.

Question 14

Ordinary repairs should be recognized when incurred as revenue expenditures.

Accepted Answer

A) True 
 B)False

Question 15

Intangible assets

Accepted Answer

A) should be reported under the heading Property, Plant, and Equipment. 
B) are not reported on the balance sheet because they lack physical substance. 
C) should be reported as Current Assets on the balance sheet. 
D) should be reported as a separate classification on the balance sheet. 
A) should be reported under the heading Property, Plant, and Equipment. 
B) are not reported on the balance sheet because they lack physical substance. 
C) should be reported as Current Assets on the balance sheet. 
D) should be reported as a separate classification on the balance sheet.

Question 16

Pearson Company bought a machine on January 1, 2022.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 depreciation expense using the straight-line method of depreciation is

Accepted Answer

A) $50,000. 
B) $36,000. 
C) $30,000. 
D) none of these answer choices are correct. 
A) $50,000. 
B) $36,000. 
C) $30,000. 
D) none of these answer choices are correct.

Question 17

Recording depreciation on plant assets affects both the balance sheet and the income statement.

Accepted Answer

A) True 
 B)False

Question 18

When estimating the useful life of an asset, accountants do not consider

Accepted Answer

A) the cost to replace the asset at the end of its useful life. 
B) vulnerability to obsolescence. 
C) expected repairs and maintenance. 
D) the intended use of the asset. 
A) the cost to replace the asset at the end of its useful life. 
B) vulnerability to obsolescence. 
C) expected repairs and maintenance. 
D) the intended use of the asset.

Question 19

Ryan, Inc.purchased a delivery truck with a $48,000 list price.The company was given a $4,800 cash discount by the dealer and paid $2,400 sales tax.Annual insurance on the truck is $1,200.As a result of the purchase, by how much will Ryan, Inc.increase its truck account?

Accepted Answer

A) $48,000 
B) $43,200 
C) $46,800 
D) $45,600 
A) $48,000 
B) $43,200 
C) $46,800 
D) $45,600

The cost of a long-term asset is expensed

Carpino Company purchased equipment and these costs were incurred: What amount should be recorded as the cost of the equipment?

All the following are needed for the computation of depreciation except

A machine was purchased for $180,000 and it was estimated to have a $12,000 salvage value at the end of its useful life.Monthly depreciation expense of $1,750 was recorded using the straight-line method.The annual depreciation rate is

Goodwill can be recorded

A permanent decline in the market value of an asset is referred to as an impairment.

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

National Molding is building a new plant that will take three years to construct.The construction will be financed in part by funds borrowed during the construction period.There are significant architect fees, excavation fees, and building permit fees.Which of the following statements is true?

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

The following information is provided for Nguyen Company and Northwest Corporation. What is Northwest's asset turnover for 2022?

If a plant asset is retired and is fully depreciated,

Ordinary repairs should be recognized when incurred as revenue expenditures.

Intangible assets

Pearson Company bought a machine on January 1, 2022.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 depreciation expense using the straight-line method of depreciation is

Recording depreciation on plant assets affects both the balance sheet and the income statement.

When estimating the useful life of an asset, accountants do not consider

Ryan, Inc.purchased a delivery truck with a $48,000 list price.The company was given a $4,800 cash discount by the dealer and paid $2,400 sales tax.Annual insurance on the truck is $1,200.As a result of the purchase, by how much will Ryan, Inc.increase its truck account?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Understanding Investments in Debt and Equity Securities

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Exam 9: Reporting and Analyzing Long-Lived Assets

The cost of a long-term asset is expensed

Carpino Company purchased equipment and these costs were incurred: What amount should be recorded as the cost of the equipment?

All the following are needed for the computation of depreciation except

A machine was purchased for $180,000 and it was estimated to have a $12,000 salvage value at the end of its useful life.Monthly depreciation expense of $1,750 was recorded using the straight-line method.The annual depreciation rate is

Goodwill can be recorded

A permanent decline in the market value of an asset is referred to as an impairment.

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

National Molding is building a new plant that will take three years to construct.The construction will be financed in part by funds borrowed during the construction period.There are significant architect fees, excavation fees, and building permit fees.Which of the following statements is true?

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

The following information is provided for Nguyen Company and Northwest Corporation. What is Northwest's asset turnover for 2022?

If a plant asset is retired and is fully depreciated,

Ordinary repairs should be recognized when incurred as revenue expenditures.

Intangible assets

Pearson Company bought a machine on January 1, 2022.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 depreciation expense using the straight-line method of depreciation is

Recording depreciation on plant assets affects both the balance sheet and the income statement.

When estimating the useful life of an asset, accountants do not consider

Ryan, Inc.purchased a delivery truck with a $48,000 list price.The company was given a $4,800 cash discount by the dealer and paid $2,400 sales tax.Annual insurance on the truck is $1,200.As a result of the purchase, by how much will Ryan, Inc.increase its truck account?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Understanding Investments in Debt and Equity Securities

Filters