Question 1

Which of the following is not true of ordinary repairs?

Accepted Answer

A) They primarily benefit the current accounting period. 
B) They can be referred to as revenue expenditures. 
C) They maintain the expected productive life of the asset. 
D) They increase the productive capacity of the asset. 
A) They primarily benefit the current accounting period. 
B) They can be referred to as revenue expenditures. 
C) They maintain the expected productive life of the asset. 
D) They increase the productive capacity of the asset.

Question 2

On Nov 2 2020 MG Company purchased equipment with $50000 cash.The equipment has an estimated salvage value of $8000 an estimated life of 7 years and is depreciated by the straight-line method.Use the following tabular analysis to determine the book value of the equipment at December 31 2022.

Accepted Answer

A) $50000. 
B) $43000. 
C) $37000. 
D) $32000. 
A) $50000. 
B) $43000. 
C) $37000. 
D) $32000.

Question 3

If an acquired franchise or license is for an indefinite time period then the cost of the asset should not be amortized.

Accepted Answer

A) True 
 B)False

Question 4

Morton's Courier Service recorded a loss of $7500 when it sold a van that originally cost $70000 for $12500.Accumulated depreciation on the van must have been

Accepted Answer

A) $65000. 
B) $20000. 
C) $62500. 
D) $50000. 
A) $65000. 
B) $20000. 
C) $62500. 
D) $50000.

Question 5

The cost of a patent should be amortized over its legal life or useful life whichever is shorter.

Accepted Answer

A) True 
 B)False

Question 6

Once cost is established for a plant asset it becomes the basis of accounting for the asset unless the asset appreciates in value in which case market value becomes the basis for accountability.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not properly classified as property plant and equipment?

Accepted Answer

A) Building used as a factory. 
B) Land used in ordinary business operations. 
C) A truck held for resale by an automobile dealership. 
D) Land improvement such as parking lots and fences. 
A) Building used as a factory. 
B) Land used in ordinary business operations. 
C) A truck held for resale by an automobile dealership. 
D) Land improvement such as parking lots and fences.

Question 8

Pearson Company bought a machine on January 1 2022.The machine cost $180000 and had an expected salvage value of $30000.The life of the machine was estimated to be 5 years.The book value of the machine at the beginning of the third year would be

Accepted Answer

A) $180000. 
B) $150000. 
C) $120000. 
D) $60000. 
A) $180000. 
B) $150000. 
C) $120000. 
D) $60000.

Question 9

Companies may disclose in the balance sheet or the notes to the financial statements the major classes of assets and accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 10

On July 1 2018 Graunke Company purchased a patent from Chimney Rock Company for $8000000.It was estimated that the patent has a remaining useful life of 4 years.On July 1 2022 Graunke retired the asset.Use the following tabular analysis to make the adjustment for retirement assuming that the cost has been fully amortized.

Accepted Answer

A) Increase Expenses and decrease Patents $2000000. 
B) Decrease Patents and increase Expenses $1000000 
C) Increase Revenues and decrease Patents $8000000. 
D) The Patent account would have a zero balance so no entry would be needed. 
A) Increase Expenses and decrease Patents $2000000. 
B) Decrease Patents and increase Expenses $1000000 
C) Increase Revenues and decrease Patents $8000000. 
D) The Patent account would have a zero balance so no entry would be needed.

Question 11

Equipment was purchased for $85000 on January 2 2022.Freight charges amounted to $3500 and there was a cost of $10000 for building a foundation and installing the equipment.The company purchased a special insurance policy for the equipment with a monthly premium of $500.Use the following tabular analysis to record these expenditures assuming that all payments were made in cash.

Accepted Answer

A) Increase Equipment $98500 increase Insurance Expense $500 and decrease Cash $99000. 
B) Increase Equipment $95000 increase Freight Expense $3500 increase Insurance Expense $500 and decrease Cash $99000. 
C) Increase Equipment $85000 and decrease Cash $85000. 
D) Increase Equipment $85000 decrease Accumulated Depreciation $13500 increase Insurance Expense $500 and decrease Cash $$85500. 
A) Increase Equipment $98500 increase Insurance Expense $500 and decrease Cash $99000. 
B) Increase Equipment $95000 increase Freight Expense $3500 increase Insurance Expense $500 and decrease Cash $99000. 
C) Increase Equipment $85000 and decrease Cash $85000. 
D) Increase Equipment $85000 decrease Accumulated Depreciation $13500 increase Insurance Expense $500 and decrease Cash $$85500.

Question 12

A truck costing $72000 and on which $60000 of accumulated depreciation has been recorded was discarded as having no value.Recording this event would include a(n)

Accepted Answer

A) gain of $12000. 
B) loss of $12000. 
C) increase to Accumulated Depreciation for $60000. 
D) increase to Accumulated Depreciation for $72000. 
A) gain of $12000. 
B) loss of $12000. 
C) increase to Accumulated Depreciation for $60000. 
D) increase to Accumulated Depreciation for $72000.

Question 13

The cost of an intangible asset must be amortized over a 20-year period.

Accepted Answer

A) True 
 B)False

Question 14

An asset was purchased for $140000.It had an estimated salvage value of $35000 and an estimated useful life of 10 years.After 5 years of use the estimated salvage value is revised to $28000 but the estimated useful life is unchanged.Assuming straight-line depreciation depreciation expense in Year 6 would be

Accepted Answer

A) $21000. 
B) $14875. 
C) $11900. 
D) $17500. 
A) $21000. 
B) $14875. 
C) $11900. 
D) $17500.

Question 15

The cost of successfully defending a patent in an infringement suit should be

Accepted Answer

A) charged to Legal Expenses. 
B) deducted from the book value of the patent. 
C) added to the Patent account. 
D) recognized as a loss in the current period. 
A) charged to Legal Expenses. 
B) deducted from the book value of the patent. 
C) added to the Patent account. 
D) recognized as a loss in the current period.

Question 16

On January 2 2022 High Country Corporation sold equipment with a book value of $60000 for $70000 cash.Use the following tabular analysis to record the sale.

Accepted Answer

A) Increase Cash $70000 decrease Equipment $160000 decrease Accumulated Depreciation $100000 and decrease Revenues $10000. 
B) Increase Cash $70000 decrease Equipment $160000 decrease Accumulated Depreciation $100000 and increase Revenues $10000. 
C) Increase Cash $70000 increase expenses (loss) $10000 decrease Equipment $160000 and decrease Accumulated Depreciation $100000. 
D) Increase Cash $70000 decrease Equipment $60000 and increase Revenues $10000. 
A) Increase Cash $70000 decrease Equipment $160000 decrease Accumulated Depreciation $100000 and decrease Revenues $10000. 
B) Increase Cash $70000 decrease Equipment $160000 decrease Accumulated Depreciation $100000 and increase Revenues $10000. 
C) Increase Cash $70000 increase expenses (loss) $10000 decrease Equipment $160000 and decrease Accumulated Depreciation $100000. 
D) Increase Cash $70000 decrease Equipment $60000 and increase Revenues $10000.

Question 17

Which of the following is not considered an intangible asset?

Accepted Answer

A) Goodwill. 
B) An oil well. 
C) A franchise. 
D) A patent. 
A) Goodwill. 
B) An oil well. 
C) A franchise. 
D) A patent.

Question 18

On January 2 2022 Feldman Corporation sold equipment with a book value of $51000 for $33000 cash.Use the following tabular analysis to record the sale.

Accepted Answer

A) Increase Cash $33000 decrease Equipment $200000 decrease Accumulated Depreciation $149000 and decrease Revenues $14000. 
B) Increase Cash $33000 decrease Equipment $200000 and decrease Accumulated Depreciation $149000. 
C) Increase Cash $33000 decrease Equipment $200000 decrease Accumulated Depreciation $149000 and increase Expenses $14000. 
D) Increase Cash $33000 decrease Equipment $51000 and increase Expenses $14000. 
A) Increase Cash $33000 decrease Equipment $200000 decrease Accumulated Depreciation $149000 and decrease Revenues $14000. 
B) Increase Cash $33000 decrease Equipment $200000 and decrease Accumulated Depreciation $149000. 
C) Increase Cash $33000 decrease Equipment $200000 decrease Accumulated Depreciation $149000 and increase Expenses $14000. 
D) Increase Cash $33000 decrease Equipment $51000 and increase Expenses $14000.

Question 19

A computer company has $4000000 in research and development costs.Before accounting for these costs the net income of the company is $4800000.What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Accepted Answer

A) $800000 net loss. 
B) $4000000 net income. 
C) $800000 net income. 
D) Cannot be determined from the information provided. 
A) $800000 net loss. 
B) $4000000 net income. 
C) $800000 net income. 
D) Cannot be determined from the information provided.

Question 20

A loss on disposal of a plant asset as a result of a sale or a retirement is calculated in the same way as a gain on disposal.

Accepted Answer

A) True 
 B)False

Which of the following is not true of ordinary repairs?

On Nov 2 2020 MG Company purchased equipment with $50000 cash.The equipment has an estimated salvage value of $8000 an estimated life of 7 years and is depreciated by the straight-line method.Use the following tabular analysis to determine the book value of the equipment at December 31 2022.

If an acquired franchise or license is for an indefinite time period then the cost of the asset should not be amortized.

Morton's Courier Service recorded a loss of $7500 when it sold a van that originally cost $70000 for $12500.Accumulated depreciation on the van must have been

The cost of a patent should be amortized over its legal life or useful life whichever is shorter.

Once cost is established for a plant asset it becomes the basis of accounting for the asset unless the asset appreciates in value in which case market value becomes the basis for accountability.

Which of the following is not properly classified as property plant and equipment?

Pearson Company bought a machine on January 1 2022.The machine cost $180000 and had an expected salvage value of $30000.The life of the machine was estimated to be 5 years.The book value of the machine at the beginning of the third year would be

Companies may disclose in the balance sheet or the notes to the financial statements the major classes of assets and accumulated depreciation.

A truck costing $72000 and on which $60000 of accumulated depreciation has been recorded was discarded as having no value.Recording this event would include a(n)

The cost of an intangible asset must be amortized over a 20-year period.

The cost of successfully defending a patent in an infringement suit should be

On January 2 2022 High Country Corporation sold equipment with a book value of $60000 for $70000 cash.Use the following tabular analysis to record the sale.

Which of the following is not considered an intangible asset?

On January 2 2022 Feldman Corporation sold equipment with a book value of $51000 for $33000 cash.Use the following tabular analysis to record the sale.

A computer company has $4000000 in research and development costs.Before accounting for these costs the net income of the company is $4800000.What is the amount of net income or loss before taxes after these research and development costs are accounted for?

A loss on disposal of a plant asset as a result of a sale or a retirement is calculated in the same way as a gain on disposal.

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 not true of ordinary repairs?

On Nov 2 2020 MG Company purchased equipment with $50000 cash.The equipment has an estimated salvage value of $8000 an estimated life of 7 years and is depreciated by the straight-line method.Use the following tabular analysis to determine the book value of the equipment at December 31 2022.

If an acquired franchise or license is for an indefinite time period then the cost of the asset should not be amortized.

Morton's Courier Service recorded a loss of $7500 when it sold a van that originally cost $70000 for $12500.Accumulated depreciation on the van must have been

The cost of a patent should be amortized over its legal life or useful life whichever is shorter.

Once cost is established for a plant asset it becomes the basis of accounting for the asset unless the asset appreciates in value in which case market value becomes the basis for accountability.

Which of the following is not properly classified as property plant and equipment?

Pearson Company bought a machine on January 1 2022.The machine cost $180000 and had an expected salvage value of $30000.The life of the machine was estimated to be 5 years.The book value of the machine at the beginning of the third year would be

Companies may disclose in the balance sheet or the notes to the financial statements the major classes of assets and accumulated depreciation.

A truck costing $72000 and on which $60000 of accumulated depreciation has been recorded was discarded as having no value.Recording this event would include a(n)

The cost of an intangible asset must be amortized over a 20-year period.

The cost of successfully defending a patent in an infringement suit should be

On January 2 2022 High Country Corporation sold equipment with a book value of $60000 for $70000 cash.Use the following tabular analysis to record the sale.

Which of the following is not considered an intangible asset?

On January 2 2022 Feldman Corporation sold equipment with a book value of $51000 for $33000 cash.Use the following tabular analysis to record the sale.

A computer company has $4000000 in research and development costs.Before accounting for these costs the net income of the company is $4800000.What is the amount of net income or loss before taxes after these research and development costs are accounted for?

A loss on disposal of a plant asset as a result of a sale or a retirement is calculated in the same way as a gain on disposal.

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