Question 1

Capital expenditures are expenditures that increase the company's investment in productive facilities.

Accepted Answer

A) True 
 B)False

Question 2

The book value of an asset is equal to the

Accepted Answer

A) asset's fair value less its historical cost. 
B) blue book value relied on by secondary markets. 
C) replacement cost of the asset. 
D) asset's cost less accumulated depreciation. 
A) asset's fair value less its historical cost. 
B) blue book value relied on by secondary markets. 
C) replacement cost of the asset. 
D) asset's cost less accumulated depreciation.

Question 3

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Accepted Answer

A) True 
 B)False

Question 4

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 make the adjustment for amortization expense on Dabney's books for the year 2022.

Accepted Answer

A) Increase Expenses and decrease Cash $100000. 
B) Increase Revenue $40000 increase Patent $160000 and decrease Cash $200000. 
C) Increase Expenses and decrease Patents $80000. 
D) Increase Expenses and decrease Patents $100000. 
A) Increase Expenses and decrease Cash $100000. 
B) Increase Revenue $40000 increase Patent $160000 and decrease Cash $200000. 
C) Increase Expenses and decrease Patents $80000. 
D) Increase Expenses and decrease Patents $100000.

Question 5

Improvements are costs incurred to maintain the operating efficiency and expected productive life of a plant asset.

Accepted Answer

A) True 
 B)False

Question 6

Goodwill is recorded only when there is an exchange transaction that involves the purchase of an entire business.

Accepted Answer

A) True 
 B)False

Question 7

Additions and improvements

Accepted Answer

A) occur frequently during the ownership of a plant asset. 
B) normally involve immaterial expenditures. 
C) increase the company's investment in productive facilities. 
D) typically only benefit the current accounting period. 
A) occur frequently during the ownership of a plant asset. 
B) normally involve immaterial expenditures. 
C) increase the company's investment in productive facilities. 
D) typically only benefit the current accounting period.

Question 8

Givens Retail purchased land for a new parking lot for $125000.The paving cost $175000 and the lights to illuminate the new parking area cost $60000.Which of the following statements is true with respect to these additions?

Accepted Answer

A) $300000 should be added to the Land account. 
B) $235000 should be added to Land Improvements. 
C) $360000 should be added to the Land account. 
D) $360000 should be added to Land Improvements. 
A) $300000 should be added to the Land account. 
B) $235000 should be added to Land Improvements. 
C) $360000 should be added to the Land account. 
D) $360000 should be added to Land Improvements.

Question 9

A plant asset with a cost of $300000 and accumulated depreciation of $285000 is sold for $35000.What is the amount of the gain or loss on disposal of the plant asset?

Accepted Answer

A) $35000 loss. 
B) $20000 loss. 
C) $20000 gain. 
D) $35000 gain. 
A) $35000 loss. 
B) $20000 loss. 
C) $20000 gain. 
D) $35000 gain.

Question 10

Which of the following is not an intangible asset arising from a government grant?

Accepted Answer

A) Goodwill. 
B) Patent. 
C) Trademark. 
D) Trade name. 
A) Goodwill. 
B) Patent. 
C) Trademark. 
D) Trade name.

Question 11

The book value of a plant asset is always equal to its fair value.

Accepted Answer

A) True 
 B)False

Question 12

The following information is provided for Nguyen Company and Northwest Corporation. $$\begin{array} { l c c } 
 { \text { (in } \$ \text { millions) } } & \text { Nquyen Company } & \text { Northwest Corporation } \
\hline  \text { Net income } 2022 & \$ 165 & \$ 420 \
\text { Net sales } 2022 & 1,650 & 4,900 \
\text { Total assets } 12 / 31 / 20 & 1,000 & 2,400 \
\text { Total assets } 12 / 31 / 21 & 1,050 & 3,000 \
\text { Total assets } 12 / 31 / 22 & 1,150 & 4,000
\end{array}$$ 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 13

Equipment costing $60000 with a salvage value of $12000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years.Assuming a revised estimated total life of 5 years and no change in the salvage value the depreciation expense for Year 3 would be

Accepted Answer

A) $7200. 
B) $16000. 
C) $12000. 
D) $9600. 
A) $7200. 
B) $16000. 
C) $12000. 
D) $9600.

Question 14

Ramirez Company acquires land for $240000 cash.Additional costs are as follow. $\begin{array}{lr}
\text { Removal of shed } & \$2,000 \
\text { Filling and grading } & 6,000 \
\text { Salvage value of lumber of shed } & 1,000 \
\text { Broker commission } & 4,520 \
\text { Paving of parking lot } & 40,000 \
\text { Closing costs } & 3,400
\end{array}$ Ramirez will record the acquisition cost of the land as

Accepted Answer

A) $254640. 
B) $257200. 
C) $255920. 
D) $240000. 
A) $254640. 
B) $257200. 
C) $255920. 
D) $240000.

Question 15

Equipment that cost $90000 and on which $50000 of accumulated depreciation has been recorded was disposed of for $45000 cash.Recording this event would include a(n)

Accepted Answer

A) gain of $5000. 
B) loss of $5000. 
C) decrease to Equipment for $15000. 
D) increase to Accumulated Depreciation for $15000. 
A) gain of $5000. 
B) loss of $5000. 
C) decrease to Equipment for $15000. 
D) increase to Accumulated Depreciation for $15000.

Question 16

In the notes to the financial statements the depreciation and amortization methods used should be described.

Accepted Answer

A) True 
 B)False

Question 17

Equipment was purchased for $150000.Freight charges amounted to $7000 and there was a cost of $20000 for building a foundation and installing the equipment.It is estimated that the equipment will have a $30000 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) $35400. 
B) $29400. 
C) $24600. 
D) $24000. 
A) $35400. 
B) $29400. 
C) $24600. 
D) $24000.

Question 18

If a company incurs legal costs in successfully defending its patent these costs are recorded by increasing

Accepted Answer

A) Legal Expense. 
B) the Intangible Loss account. 
C) the Patent account. 
D) a revenue expenditure account. 
A) Legal Expense. 
B) the Intangible Loss account. 
C) the Patent account. 
D) a revenue expenditure account.

Question 19

Rodgers Company purchased equipment and these costs were incurred: $$\begin{array} { l r } 
\text { Cash price } & \$ 55,000 \
\text { Sales taxes } & 3,600 \
\text { Insurance during transit } & 640 \
\text { Installation and testing } & 860 \
\text { Total costs } & \$ 60,100
\end{array}$$ Rodgers will record the acquisition cost of the equipment as

Accepted Answer

A) $55000. 
B) $58600. 
C) $59240. 
D) $60100. 
A) $55000. 
B) $58600. 
C) $59240. 
D) $60100.

Question 20

Runge Company purchased machinery on January 1 at a list price of $300000 with a 2% discount if payment is made within a 10-day discount period.Payment was made within the discount period.Runge paid $15000 sales tax on the machinery and paid installation charges of $5300.Prior to installation Runge paid $12000 to pour a concrete slab on which to place the machinery.What is the total cost of the new machinery?

Accepted Answer

A) $314300. 
B) $326300. 
C) $332300. 
D) $309000. 
A) $314300. 
B) $326300. 
C) $332300. 
D) $309000.

Capital expenditures are expenditures that increase the company's investment in productive facilities.

The book value of an asset is equal to the

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Improvements are costs incurred to maintain the operating efficiency and expected productive life of a plant asset.

Goodwill is recorded only when there is an exchange transaction that involves the purchase of an entire business.

Additions and improvements

Givens Retail purchased land for a new parking lot for $125000.The paving cost $175000 and the lights to illuminate the new parking area cost $60000.Which of the following statements is true with respect to these additions?

A plant asset with a cost of $300000 and accumulated depreciation of $285000 is sold for $35000.What is the amount of the gain or loss on disposal of the plant asset?

Which of the following is not an intangible asset arising from a government grant?

The book value of a plant asset is always equal to its fair value.

Equipment costing $60000 with a salvage value of $12000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years.Assuming a revised estimated total life of 5 years and no change in the salvage value the depreciation expense for Year 3 would be

Ramirez Company acquires land for $240000 cash.Additional costs are as follow. Removal of shed \2 ,000 Filling and grading 6,000 Salvage value of lumber of shed 1,000 Broker commission 4,520 Paving of parking lot 40,000 Closing costs 3,400 Ramirez will record the acquisition cost of the land as

Equipment that cost $90000 and on which $50000 of accumulated depreciation has been recorded was disposed of for $45000 cash.Recording this event would include a(n)

In the notes to the financial statements the depreciation and amortization methods used should be described.

If a company incurs legal costs in successfully defending its patent these costs are recorded by increasing

Rodgers Company purchased equipment and these costs were incurred: Cash price \ 55,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing 860 Total costs \ 60,100 Rodgers will record the acquisition cost of the equipment as

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

Capital expenditures are expenditures that increase the company's investment in productive facilities.

The book value of an asset is equal to the

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Improvements are costs incurred to maintain the operating efficiency and expected productive life of a plant asset.

Goodwill is recorded only when there is an exchange transaction that involves the purchase of an entire business.

Additions and improvements

Givens Retail purchased land for a new parking lot for $125000.The paving cost $175000 and the lights to illuminate the new parking area cost $60000.Which of the following statements is true with respect to these additions?

A plant asset with a cost of $300000 and accumulated depreciation of $285000 is sold for $35000.What is the amount of the gain or loss on disposal of the plant asset?

Which of the following is not an intangible asset arising from a government grant?

The book value of a plant asset is always equal to its fair value.

Equipment costing $60000 with a salvage value of $12000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years.Assuming a revised estimated total life of 5 years and no change in the salvage value the depreciation expense for Year 3 would be

Ramirez Company acquires land for $240000 cash.Additional costs are as follow. Removal of shed \2 ,000 Filling and grading 6,000 Salvage value of lumber of shed 1,000 Broker commission 4,520 Paving of parking lot 40,000 Closing costs 3,400 Ramirez will record the acquisition cost of the land as

Equipment that cost $90000 and on which $50000 of accumulated depreciation has been recorded was disposed of for $45000 cash.Recording this event would include a(n)

In the notes to the financial statements the depreciation and amortization methods used should be described.

If a company incurs legal costs in successfully defending its patent these costs are recorded by increasing

Rodgers Company purchased equipment and these costs were incurred: Cash price \ 55,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing 860 Total costs \ 60,100 Rodgers will record the acquisition cost of the equipment as

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