Question 1

Which of the following is included in the cost of constructing a building?

Accepted Answer

A) Cost of paving a parking lot. 
B) Cost of repairing vandalism damage incurred shortly after construction is complete. 
C) Interest incurred during construction. 
D) Cost of removing the demolished building existing on the land when it was purchased. 
A) Cost of paving a parking lot. 
B) Cost of repairing vandalism damage incurred shortly after construction is complete. 
C) Interest incurred during construction. 
D) Cost of removing the demolished building existing on the land when it was purchased. C

Question 2

Which of the following statements concerning financial statement presentation is false?

Accepted Answer

A) Intangibles are reported separately under Intangible Assets. 
B) The balances of major classes of assets may be disclosed in the footnotes. 
C) The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes. 
D) The balances of all individual assets as they appear in the accounting records should be disclosed in the footnotes. 
A) Intangibles are reported separately under Intangible Assets. 
B) The balances of major classes of assets may be disclosed in the footnotes. 
C) The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes. 
D) The balances of all individual assets as they appear in the accounting records should be disclosed in the footnotes. D

Question 3

Companies usually show plant assets under "Property plant and equipment" in the balance sheet.

Accepted Answer

A) True 
 B)False  True

Question 4

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 5

On January 1 a machine with a useful life of five years and a salvage value of $25000 was purchased for $125000.What is the depreciation expense for year 2 under straight-line depreciation?

Accepted Answer

A) $15000. 
B) $75000. 
C) $20000. 
D) $60000. 
A) $15000. 
B) $75000. 
C) $20000. 
D) $60000.

Question 6

The following information is provided for Nguyen Company and Northwest Corporation. $$\begin{array} { l c c } 
 { \text { (in } \$ \text { millions) } } & \text { Nquyen Company } & \text { Northwest Corporation } \
\hline  \text { Net income } 2022 & \$ 165 & \$ 420 \
\text { Net sales } 2022 & 1,650 & 4,900 \
\text { Total assets } 12 / 31 / 20 & 1,000 & 2,400 \
\text { Total assets } 12 / 31 / 21 & 1,050 & 3,000 \
\text { Total assets } 12 / 31 / 22 & 1,150 & 4,000
\end{array}$$ If Nguyen and Northwest are in the same industry and the industry average for asset turnover is equal to 1.20 times which of the following statements is true?

Accepted Answer

A) Only 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 does not address the question of efficient operations. 
A) Only 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 does not address the question of efficient operations.

Question 7

A company has the following assets: $\begin{array}{lr}
\text { Buildings and Equipment, } \
\quad \text { less accumulated depreciation of } \$ 4,000,000 & \$ 23,000,000 \
\text { Copyrights } & 1,500,000 \
\text { Patents } & 3,000,000 \
\text { Land } & 5,000,000
\end{array}$ The total amount reported under Property Plant and Equipment would be

Accepted Answer

A) $32500000. 
B) $27000000. 
C) $29500000. 
D) $28000000. 
A) $32500000. 
B) $27000000. 
C) $29500000. 
D) $28000000.

Question 8

Arnold Company purchases a new delivery truck for $45000.The sales taxes are $2500.The logo of the company is painted on the side of the truck for $1200.The truck's annual license is $120.The truck undergoes safety testing for $220.What does Arnold record as the cost of the new truck?

Accepted Answer

A) $49040. 
B) $48920. 
C) $47500. 
D) $46920. 
A) $49040. 
B) $48920. 
C) $47500. 
D) $46920.

Question 9

On January 2 2022 Dabney Company purchased a copyright from North Company for $200000.The copyright was recorded on North's books for $160000.It is estimated that the copyright has a remaining useful life of 2 years.Use the following tabular analysis to record the sale of the copyright by North.

Accepted Answer

A) Decrease Copyrights $160000 increase Revenues $40000 and increase Cash $200000. 
B) Increase Revenues and Cash $200000. 
C) Increase Expenses and decrease Patents $80000. 
D) Increase Cash and decrease Patents $200000. 
A) Decrease Copyrights $160000 increase Revenues $40000 and increase Cash $200000. 
B) Increase Revenues and Cash $200000. 
C) Increase Expenses and decrease Patents $80000. 
D) Increase Cash and decrease Patents $200000.

Question 10

A plant asset with a cost of $600000 and accumulated depreciation of $570000 is sold for $70000.What is the amount of the gain or loss on disposal of the plant asset?

Accepted Answer

A) $70000 loss. 
B) $40000 loss. 
C) $40000 gain. 
D) $70000 gain. 
A) $70000 loss. 
B) $40000 loss. 
C) $40000 gain. 
D) $70000 gain.

Question 11

Intangible assets are the rights and privileges that result from ownership of long-lived assets that

Accepted Answer

A) must be generated internally. 
B) are depreciated over their useful life. 
C) have been exchanged at a gain. 
D) do not have physical substance. 
A) must be generated internally. 
B) are depreciated over their useful life. 
C) have been exchanged at a gain. 
D) do not have physical substance.

Question 12

On November 1 2021

Accepted Answer

A) $4000. 
B) $16000. 
C) $2667. 
D) $9000. 
A) $4000. 
B) $16000. 
C) $2667. 
D) $9000.

Question 13

Compton Inc.made a $500 ordinary repair to a piece of equipment.Compton's accountant added this amount to the asset account Equipment and decreased Cash.Was this action correct and if not why not?

Accepted Answer

A) Yes this action was correct. 
B) No the correct action would be to increase Maintenance and Repairs Expense and decrease Cash. 
C) No the correct action would be to increase Cash and decrease Maintenance and Repairs Expense. 
D) No the correct action would be to decrease Service Revenue and decrease Cash. 
A) Yes this action was correct. 
B) No the correct action would be to increase Maintenance and Repairs Expense and decrease Cash. 
C) No the correct action would be to increase Cash and decrease Maintenance and Repairs Expense. 
D) No the correct action would be to decrease Service Revenue and decrease Cash.

Question 14

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.The life of the equipment was estimated to be 6 years.The depreciation expense using the straight-line method of depreciation is

Accepted Answer

A) $58333. 
B) $60000. 
C) $41667. 
D) none of these answer choices are correct. 
A) $58333. 
B) $60000. 
C) $41667. 
D) none of these answer choices are correct.

Question 15

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

Accepted Answer

A) True 
 B)False

Question 16

Equipment was purchased for $85000 on January 1 2021.Freight charges amounted to $3500 and there was a cost of $10000 for building a foundation and installing the equipment.It is estimated that the equipment will have a $15000 salvage value at the end of its 5-year useful life.What is the amount of accumulated depreciation at December 31 2022 if the straight-line method of depreciation is used?

Accepted Answer

A) $33400. 
B) $16700. 
C) $14300. 
D) $28600. 
A) $33400. 
B) $16700. 
C) $14300. 
D) $28600.

Question 17

If the proceeds from the sale of a plant asset exceed its book value a gain on disposal occurs.

Accepted Answer

A) True 
 B)False

Question 18

The declining-balance method of depreciation is called an accelerated depreciation method because it depreciates an asset in a shorter period of time than the asset's useful life.

Accepted Answer

A) True 
 B)False

Question 19

A company has the following assets: Buildings and Equipment $\begin{array}{lr}
\text { less accumulated depreciation of } \$ 5,000,000 & \$ 25,000,000 \
\text { Copyrights } & 2,400,000 \
\text { Patents } & 10,000,000 \
\text { Land } & 12,000,000
\end{array}$ The total amount reported under Property Plant and Equipment would be

Accepted Answer

A) $49400000. 
B) $37000000. 
C) $47000000. 
D) $39400000. 
A) $49400000. 
B) $37000000. 
C) $47000000. 
D) $39400000.

Question 20

Copyrights are granted by the federal government

Accepted Answer

A) for the life of the creator or 70 years whichever is longer. 
B) for the life of the creator plus 70 years. 
C) for the life of the creator or 70 years whichever is shorter. 
D) and therefore cannot be amortized. 
A) for the life of the creator or 70 years whichever is longer. 
B) for the life of the creator plus 70 years. 
C) for the life of the creator or 70 years whichever is shorter. 
D) and therefore cannot be amortized.

Which of the following is included in the cost of constructing a building?

Which of the following statements concerning financial statement presentation is false?

Companies usually show plant assets under "Property plant and equipment" in the balance sheet.

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

On January 1 a machine with a useful life of five years and a salvage value of $25000 was purchased for $125000.What is the depreciation expense for year 2 under straight-line depreciation?

A company has the following assets: Buildings and Equipment, less accumulated depreciation of \ 4,000,000 \ 23,000,000 Copyrights 1,500,000 Patents 3,000,000 Land 5,000,000 The total amount reported under Property Plant and Equipment would be

Arnold Company purchases a new delivery truck for $45000.The sales taxes are $2500.The logo of the company is painted on the side of the truck for $1200.The truck's annual license is $120.The truck undergoes safety testing for $220.What does Arnold record as the cost of the new truck?

On January 2 2022 Dabney Company purchased a copyright from North Company for $200000.The copyright was recorded on North's books for $160000.It is estimated that the copyright has a remaining useful life of 2 years.Use the following tabular analysis to record the sale of the copyright by North.

A plant asset with a cost of $600000 and accumulated depreciation of $570000 is sold for $70000.What is the amount of the gain or loss on disposal of the plant asset?

Intangible assets are the rights and privileges that result from ownership of long-lived assets that

On November 1 2021

Compton Inc.made a $500 ordinary repair to a piece of equipment.Compton's accountant added this amount to the asset account Equipment and decreased Cash.Was this action correct and if not why not?

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.The life of the equipment was estimated to be 6 years.The depreciation expense using the straight-line method of depreciation is

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

If the proceeds from the sale of a plant asset exceed its book value a gain on disposal occurs.

The declining-balance method of depreciation is called an accelerated depreciation method because it depreciates an asset in a shorter period of time than the asset's useful life.

A company has the following assets: Buildings and Equipment less accumulated depreciation of \ 5,000,000 \ 25,000,000 Copyrights 2,400,000 Patents 10,000,000 Land 12,000,000 The total amount reported under Property Plant and Equipment would be

Copyrights are granted by the federal government

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 7: Reporting and Analyzing Liabilities and Stockholders Equity

Which of the following is included in the cost of constructing a building?

Which of the following statements concerning financial statement presentation is false?

Companies usually show plant assets under "Property plant and equipment" in the balance sheet.

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

On January 1 a machine with a useful life of five years and a salvage value of $25000 was purchased for $125000.What is the depreciation expense for year 2 under straight-line depreciation?

A company has the following assets: Buildings and Equipment, less accumulated depreciation of \ 4,000,000 \ 23,000,000 Copyrights 1,500,000 Patents 3,000,000 Land 5,000,000 The total amount reported under Property Plant and Equipment would be

Arnold Company purchases a new delivery truck for $45000.The sales taxes are $2500.The logo of the company is painted on the side of the truck for $1200.The truck's annual license is $120.The truck undergoes safety testing for $220.What does Arnold record as the cost of the new truck?

On January 2 2022 Dabney Company purchased a copyright from North Company for $200000.The copyright was recorded on North's books for $160000.It is estimated that the copyright has a remaining useful life of 2 years.Use the following tabular analysis to record the sale of the copyright by North.

A plant asset with a cost of $600000 and accumulated depreciation of $570000 is sold for $70000.What is the amount of the gain or loss on disposal of the plant asset?

Intangible assets are the rights and privileges that result from ownership of long-lived assets that

On November 1 2021

Compton Inc.made a $500 ordinary repair to a piece of equipment.Compton's accountant added this amount to the asset account Equipment and decreased Cash.Was this action correct and if not why not?

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.The life of the equipment was estimated to be 6 years.The depreciation expense using the straight-line method of depreciation is

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

If the proceeds from the sale of a plant asset exceed its book value a gain on disposal occurs.

The declining-balance method of depreciation is called an accelerated depreciation method because it depreciates an asset in a shorter period of time than the asset's useful life.

A company has the following assets: Buildings and Equipment less accumulated depreciation of \ 5,000,000 \ 25,000,000 Copyrights 2,400,000 Patents 10,000,000 Land 12,000,000 The total amount reported under Property Plant and Equipment would be

Copyrights are granted by the federal government

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters