Question 1

Under the double-declining-balance method, the depreciation rate used each year remains constant.

Accepted Answer

A) True 
 B)False

Question 2

The following information is provided for Nguyen Company and Northwest Corporation.   What is Northwest's asset turnover ratio for 2014?

Accepted Answer

A)  1.17 times 
B)  1.05 times 
C)  1.52 times 
D)  1.03 times 
A)  1.17 times 
B)  1.05 times 
C)  1.52 times 
D)  1.03 times

Question 3

The following information is provided for Nguyen Company and Northwest Corporation.   If Nguyen and Northwest are in the same industry and the industry average for the asset turnover ratio is equal to 1.20 times, which of the following statements is true?

Accepted Answer

A)  Nguyen is operating more efficiently than the industry. 
B)  Northwest is operating more efficiently than Nguyen. 
C)  Both Nguyen and Northwest are operating more efficiently than the average company in their industry. 
D)  The asset turnover ratio does not address the question of efficient operations. 
A)  Nguyen is operating more efficiently than the industry. 
B)  Northwest is operating more efficiently than Nguyen. 
C)  Both Nguyen and Northwest are operating more efficiently than the average company in their industry. 
D)  The asset turnover ratio does not address the question of efficient operations.

Question 4

The cost of land does not include

Accepted Answer

A)  real estate brokers' commission. 
B)  annual property taxes. 
C)  accrued property taxes assumed by the purchaser. 
D)  title fees. 
A)  real estate brokers' commission. 
B)  annual property taxes. 
C)  accrued property taxes assumed by the purchaser. 
D)  title fees.

Question 5

A machine was purchased for $180,000 and it was estimated to have an $12,000 salvage value at the end of its useful life. Monthly depreciation expense of $1,400 was recorded using the straight-line method. The annual depreciation rate is

Accepted Answer

A)  12%. 
B)  2%. 
C)  8%. 
D)  10%. 
A)  12%. 
B)  2%. 
C)  8%. 
D)  10%.

Question 6

When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Equipment.

Accepted Answer

A) True 
 B)False

Question 7

Aber Company buys land for $145,000 on 12/31/13. As of 3/31/14, the land has appreciated in value to $152,000. On 12/31/14, the land has an appraised value of $155,400. By what amount should the Land account be increased in 2014?

Accepted Answer

A)  $0. 
B)  $7,000. 
C)  $3,400. 
D)  $10,400. 
A)  $0. 
B)  $7,000. 
C)  $3,400. 
D)  $10,400.

Question 8

A computer company has $2,500,000 in research and development costs. Before accounting for these costs, the net income of the company is $2,000,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Accepted Answer

A)  $500,000 loss. 
B)  $2,000,000 net income. 
C)  $0. 
D)  Cannot be determined from the information provided. 
A)  $500,000 loss. 
B)  $2,000,000 net income. 
C)  $0. 
D)  Cannot be determined from the information provided.

Question 9

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not in prior periods.

Accepted Answer

A) True 
 B)False

Question 10

The Land account would include all of the following costs except

Accepted Answer

A)  drainage costs. 
B)  the cost of building a fence. 
C)  commissions paid to real estate agents. 
D)  the cost of tearing down a building. 
A)  drainage costs. 
B)  the cost of building a fence. 
C)  commissions paid to real estate agents. 
D)  the cost of tearing down a building.

Question 11

On January 1, a machine with a useful life of five years and a residual value of $40,000 was purchased for $120,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

Accepted Answer

A)  $28,800. 
B)  $48,000. 
C)  $38,400. 
D)  $23,040. 
A)  $28,800. 
B)  $48,000. 
C)  $38,400. 
D)  $23,040.

Question 12

A truck costing $48,000 and on which $40,000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record this event would include a

Accepted Answer

A)  gain of $8,000. 
B)  loss of $8,000. 
C)  credit to Accumulated Depreciation for $40,000. 
D)  credit to Accumulated Depreciation for $48,000. 
A)  gain of $8,000. 
B)  loss of $8,000. 
C)  credit to Accumulated Depreciation for $40,000. 
D)  credit to Accumulated Depreciation for $48,000.

Question 13

A truck costing $45,000 and on which $39,000 of accumulated depreciation has been re-corded was discarded as having no value. The entry to record this event would include a

Accepted Answer

A)  gain of $6,000. 
B)  loss of $6,000. 
C)  credit to Accumulated Depreciation for $39,000. 
D)  credit to Accumulated Depreciation for $45,000. 
A)  gain of $6,000. 
B)  loss of $6,000. 
C)  credit to Accumulated Depreciation for $39,000. 
D)  credit to Accumulated Depreciation for $45,000.

Question 14

The declining-balance method of depreciation produces a(n)

Accepted Answer

A)  decreasing depreciation expense each period. 
B)  increasing depreciation expense each period. 
C)  declining percentage rate each period. 
D)  constant amount of depreciation expense each period. 
A)  decreasing depreciation expense each period. 
B)  increasing depreciation expense each period. 
C)  declining percentage rate each period. 
D)  constant amount of depreciation expense each period.

Question 15

Newell Company purchased a machine with a list price of $96,000. They were given a 10% discount by the manufacturer. They paid $600 for shipping and sales tax of $4,500. Newell estimates that the machine will have a useful life of 10 years and a residual value of $30,000. If Newell uses straight-line depreciation, annual depreciation will be

Accepted Answer

A)  $6,150. 
B)  $6,108. 
C)  $9,150. 
D)  $5,640. 
A)  $6,150. 
B)  $6,108. 
C)  $9,150. 
D)  $5,640.

Question 16

Machinery was purchased for $170,000. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $30,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

Accepted Answer

A)  $39,400. 
B)  $33,400. 
C)  $28,600. 
D)  $28,000. 
A)  $39,400. 
B)  $33,400. 
C)  $28,600. 
D)  $28,000.

Question 17

On January 1, a machine with a useful life of five years and a residual value of $15,000 was purchased for $75,000. What is the depreciation expense for year 2 under straight-line depreciation?

Accepted Answer

A)  $15,000. 
B)  $45,000. 
C)  $12,000. 
D)  $36,000. 
A)  $15,000. 
B)  $45,000. 
C)  $12,000. 
D)  $36,000.

Question 18

Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X).

Accepted Answer

The answer of Indicate whether each of the following expenditures...

Question 19

A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $3,600,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Accepted Answer

A)  $600,000 loss. 
B)  $3,000,000 net income. 
C)  $600,000 net income. 
D)  Cannot be determined from the information provided. 
A)  $600,000 loss. 
B)  $3,000,000 net income. 
C)  $600,000 net income. 
D)  Cannot be determined from the information provided.

Question 20

Land improvements should be depreciated over the useful life of the

Accepted Answer

A)  land. 
B)  buildings on the land. 
C)  land or land improvements, whichever is longer. 
D)  land improvements. 
A)  land. 
B)  buildings on the land. 
C)  land or land improvements, whichever is longer. 
D)  land improvements.

Under the double-declining-balance method, the depreciation rate used each year remains constant.

The following information is provided for Nguyen Company and Northwest Corporation. What is Northwest's asset turnover ratio for 2014?

The following information is provided for Nguyen Company and Northwest Corporation. If Nguyen and Northwest are in the same industry and the industry average for the asset turnover ratio is equal to 1.20 times, which of the following statements is true?

The cost of land does not include

A machine was purchased for $180,000 and it was estimated to have an $12,000 salvage value at the end of its useful life. Monthly depreciation expense of $1,400 was recorded using the straight-line method. The annual depreciation rate is

When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Equipment.

Aber Company buys land for $145,000 on 12/31/13. As of 3/31/14, the land has appreciated in value to $152,000. On 12/31/14, the land has an appraised value of $155,400. By what amount should the Land account be increased in 2014?

A computer company has $2,500,000 in research and development costs. Before accounting for these costs, the net income of the company is $2,000,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not in prior periods.

The Land account would include all of the following costs except

On January 1, a machine with a useful life of five years and a residual value of $40,000 was purchased for $120,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

A truck costing $48,000 and on which $40,000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record this event would include a

A truck costing $45,000 and on which $39,000 of accumulated depreciation has been re-corded was discarded as having no value. The entry to record this event would include a

The declining-balance method of depreciation produces a(n)

On January 1, a machine with a useful life of five years and a residual value of $15,000 was purchased for $75,000. What is the depreciation expense for year 2 under straight-line depreciation?

Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X).

A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $3,600,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Land improvements should be depreciated over the useful life of the

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

Time Value of Money

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Exam 9: Reporting and Analyzing Long-Lived Assets

Under the double-declining-balance method, the depreciation rate used each year remains constant.

The following information is provided for Nguyen Company and Northwest Corporation. What is Northwest's asset turnover ratio for 2014?

The following information is provided for Nguyen Company and Northwest Corporation. If Nguyen and Northwest are in the same industry and the industry average for the asset turnover ratio is equal to 1.20 times, which of the following statements is true?

The cost of land does not include

A machine was purchased for $180,000 and it was estimated to have an $12,000 salvage value at the end of its useful life. Monthly depreciation expense of $1,400 was recorded using the straight-line method. The annual depreciation rate is

When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Equipment.

Aber Company buys land for $145,000 on 12/31/13. As of 3/31/14, the land has appreciated in value to $152,000. On 12/31/14, the land has an appraised value of $155,400. By what amount should the Land account be increased in 2014?

A computer company has $2,500,000 in research and development costs. Before accounting for these costs, the net income of the company is $2,000,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not in prior periods.

The Land account would include all of the following costs except

On January 1, a machine with a useful life of five years and a residual value of $40,000 was purchased for $120,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

A truck costing $48,000 and on which $40,000 of accumulated depreciation has been recorded was discarded as having no value. The entry to record this event would include a

A truck costing $45,000 and on which $39,000 of accumulated depreciation has been re-corded was discarded as having no value. The entry to record this event would include a

The declining-balance method of depreciation produces a(n)

On January 1, a machine with a useful life of five years and a residual value of $15,000 was purchased for $75,000. What is the depreciation expense for year 2 under straight-line depreciation?

Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X).

A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $3,600,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Land improvements should be depreciated over the useful life of the

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

Time Value of Money

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