Question 1

The total cost of an asset less its accumulated depreciation is called:

Accepted Answer

A) Current (market)value. 
B) Present value. 
C) Book value. 
D) Replacement cost. 
E) Historical cost. 
A) Current (market)value. 
B) Present value. 
C) Book value. 
D) Replacement cost. 
E) Historical cost.

Question 2

A trademark is an exclusive right granted to its owner to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.

Accepted Answer

A) True 
 B)False

Question 3

Once the estimated depreciation expense for an asset is calculated:

Accepted Answer

A) The estimate itself cannot be changed; however, new information should be disclosed in financial statement footnotes. 
B) Any changes are accumulated and recognized when the asset is sold. 
C) It may be revised based on new information. 
D) It cannot be changed, based on the historical cost principle. 
E) It cannot be changed, based on the consistency principle. 
A) The estimate itself cannot be changed; however, new information should be disclosed in financial statement footnotes. 
B) Any changes are accumulated and recognized when the asset is sold. 
C) It may be revised based on new information. 
D) It cannot be changed, based on the historical cost principle. 
E) It cannot be changed, based on the consistency principle.

Question 4

A company purchased a mineral deposit for $800,000. It expects this property to produce 120,000 tons of minerals and to have a salvage value of $50,000. In the current year, the company mined and sold 9,000 tons of minerals. Its depletion expense for the current period equals:

Accepted Answer

A) $60,000. 
B) $139,500. 
C) $150,000. 
D) $56,250. 
E) $15,000. 
A) $60,000. 
B) $139,500. 
C) $150,000. 
D) $56,250. 
E) $15,000.

Question 5

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

Accepted Answer

A) True 
 B)False

Question 6

What are some of the variables that make a plant asset's useful life difficult to predict?

Accepted Answer

There are several factors that make it d

Question 7

Betterments are a type of capital expenditure.

Accepted Answer

A) True 
 B)False

Question 8

Revenue expenditures, also called income statement expenditures, are additional costs of plant assets that do not materially increase the assets' life or productive capabilities.

Accepted Answer

A) True 
 B)False

Question 9

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

Accepted Answer

A) 1.23. 
B) 1.09. 
C) 1.13. 
D) 0.81. 
E) 0.89. 
A) 1.23. 
B) 1.09. 
C) 1.13. 
D) 0.81. 
E) 0.89.

Question 10

What are the general accounting procedures for recording asset disposals?

Accepted Answer

The first step in the accounting process

Question 11

The modified accelerated cost recovery system (MACRS):

Accepted Answer

A) Does not allow partial year depreciation. 
B) Is an outdated system that is no longer used by companies. 
C) Is identical to units of production depreciation. 
D) Is required for financial reporting. 
E) Is included in the U.S. federal income tax rules for depreciating assets. 
A) Does not allow partial year depreciation. 
B) Is an outdated system that is no longer used by companies. 
C) Is identical to units of production depreciation. 
D) Is required for financial reporting. 
E) Is included in the U.S. federal income tax rules for depreciating assets.

Question 12

Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated.

Accepted Answer

A) True 
 B)False

Question 13

Another name for a capital expenditure is:

Accepted Answer

A) Long-term expenditure. 
B) Balance sheet expenditure. 
C) Contributed capital expenditure. 
D) Asset expenditure. 
E) Revenue expenditure. 
A) Long-term expenditure. 
B) Balance sheet expenditure. 
C) Contributed capital expenditure. 
D) Asset expenditure. 
E) Revenue expenditure.

Question 14

The useful life of a plant asset is:

Accepted Answer

A) Never related to its physical life. 
B) Determined by law. 
C) Determined by the FASB. 
D) Its productive life, but not to exceed one year. 
E) The length of time it is productively used in a company's operations. 
A) Never related to its physical life. 
B) Determined by law. 
C) Determined by the FASB. 
D) Its productive life, but not to exceed one year. 
E) The length of time it is productively used in a company's operations.

Question 15

The calculation of total asset turnover is:

Accepted Answer

A) Net assets multiplied by total assets. 
B) Average total assets multiplied by net sales. 
C) Gross profit divided by average total assets. 
D) Average total assets divided by gross profit. 
E) Net sales divided by average total assets. 
A) Net assets multiplied by total assets. 
B) Average total assets multiplied by net sales. 
C) Gross profit divided by average total assets. 
D) Average total assets divided by gross profit. 
E) Net sales divided by average total assets.

Question 16

A leasehold is:

Accepted Answer

A) The same as a patent. 
B) The rights granted to the lessee by the lessor of a lease. 
C) Recorded as revenue expenditure when paid. 
D) A short-term rental agreement. 
E) An asset held as an investment. 
A) The same as a patent. 
B) The rights granted to the lessee by the lessor of a lease. 
C) Recorded as revenue expenditure when paid. 
D) A short-term rental agreement. 
E) An asset held as an investment.

Question 17

A company had a tractor destroyed by fire. The tractor originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. The company should recognize:

Accepted Answer

A) A gain of $20,000. 
B) A loss of $5,000. 
C) A gain of $65,000. 
D) A gain of $5,000. 
E) A loss of $20,000. 
A) A gain of $20,000. 
B) A loss of $5,000. 
C) A gain of $65,000. 
D) A gain of $5,000. 
E) A loss of $20,000.

Question 18

Crestfield leases office space for $7,000 per month. On January 3, the company incurs $12,000 to improve the leased office space. These improvements are expected to yield benefits for 10 years. Crestfield has 4 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?

Accepted Answer

A) Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000. 
B) Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200. 
C) Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200. 
D) Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000. 
E) Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000. 
A) Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000. 
B) Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200. 
C) Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200. 
D) Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000. 
E) Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000.

Question 19

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Accepted Answer

A) True 
 B)False

Question 20

Martin Company purchases a machine at the beginning of the year at a cost of $60,000. The machine is depreciated using the double-declining-balance method. The machine's useful life is estimated to be 4 years with a $5,000 salvage value. The machine's book value at the end of year 3 is:

Accepted Answer

A) $45,000. 
B) $30,000. 
C) $7,500. 
D) $6,875. 
E) $52,500. 
A) $45,000. 
B) $30,000. 
C) $7,500. 
D) $6,875. 
E) $52,500.

The total cost of an asset less its accumulated depreciation is called:

A trademark is an exclusive right granted to its owner to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.

Once the estimated depreciation expense for an asset is calculated:

A company purchased a mineral deposit for $800,000. It expects this property to produce 120,000 tons of minerals and to have a salvage value of $50,000. In the current year, the company mined and sold 9,000 tons of minerals. Its depletion expense for the current period equals:

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

What are some of the variables that make a plant asset's useful life difficult to predict?

Betterments are a type of capital expenditure.

Revenue expenditures, also called income statement expenditures, are additional costs of plant assets that do not materially increase the assets' life or productive capabilities.

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

What are the general accounting procedures for recording asset disposals?

The modified accelerated cost recovery system (MACRS):

Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated.

Another name for a capital expenditure is:

The useful life of a plant asset is:

The calculation of total asset turnover is:

A leasehold is:

A company had a tractor destroyed by fire. The tractor originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. The company should recognize:

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Martin Company purchases a machine at the beginning of the year at a cost of $60,000. The machine is depreciated using the double-declining-balance method. The machine's useful life is estimated to be 4 years with a $5,000 salvage value. The machine's book value at the end of year 3 is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 10: Plant Assets, Natural Resoures, and Intangibles

The total cost of an asset less its accumulated depreciation is called:

A trademark is an exclusive right granted to its owner to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.

Once the estimated depreciation expense for an asset is calculated:

A company purchased a mineral deposit for $800,000. It expects this property to produce 120,000 tons of minerals and to have a salvage value of $50,000. In the current year, the company mined and sold 9,000 tons of minerals. Its depletion expense for the current period equals:

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

What are some of the variables that make a plant asset's useful life difficult to predict?

Betterments are a type of capital expenditure.

Revenue expenditures, also called income statement expenditures, are additional costs of plant assets that do not materially increase the assets' life or productive capabilities.

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

What are the general accounting procedures for recording asset disposals?

The modified accelerated cost recovery system (MACRS):

Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated.

Another name for a capital expenditure is:

The useful life of a plant asset is:

The calculation of total asset turnover is:

A leasehold is:

A company had a tractor destroyed by fire. The tractor originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. The company should recognize:

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Martin Company purchases a machine at the beginning of the year at a cost of $60,000. The machine is depreciated using the double-declining-balance method. The machine's useful life is estimated to be 4 years with a $5,000 salvage value. The machine's book value at the end of year 3 is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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