Question 1

If net sales revenue and the average book value of fixed assets both rise 5%:

Accepted Answer

A)  the fixed asset turnover ratio will rise. 
B)  the fixed asset turnover ratio will fall. 
C)  the fixed asset turnover ratio will stay the same. 
D)  the impact on the fixed asset turnover ratio cannot be determined since the beginning values are unknown. 
A)  the fixed asset turnover ratio will rise. 
B)  the fixed asset turnover ratio will fall. 
C)  the fixed asset turnover ratio will stay the same. 
D)  the impact on the fixed asset turnover ratio cannot be determined since the beginning values are unknown. C

Question 2

Which of the following statements about tangible long-lived assets is not correct?

Accepted Answer

A)  Depreciation and maintenance are expenses associated with the use of tangible long-lived assets. 
B)  Assuming no additions, replacements, or extraordinary repairs, the carrying value of a long-lived asset is never more than its original cost. 
C)  The cost of a long-lived asset minus the Accumulated Depreciation is called the carrying value of the asset. 
D)  All long-lived assets are depreciated as they are used in the business. 
A)  Depreciation and maintenance are expenses associated with the use of tangible long-lived assets. 
B)  Assuming no additions, replacements, or extraordinary repairs, the carrying value of a long-lived asset is never more than its original cost. 
C)  The cost of a long-lived asset minus the Accumulated Depreciation is called the carrying value of the asset. 
D)  All long-lived assets are depreciated as they are used in the business. D

Question 3

Beta Co.recorded a loss due to impairment of some of its assets.As a result of this journal entry:

Accepted Answer

A)  liabilities are increased. 
B)  expenses are increased. 
C)  Stockholders' equity is increased. 
D)  Assets are decreased. 
A)  liabilities are increased. 
B)  expenses are increased. 
C)  Stockholders' equity is increased. 
D)  Assets are decreased. D

Question 4

When a company sells equipment for cash on a date other than the last day of the accounting period,it must:

Accepted Answer

A)  record Depreciation Expense for the entire accounting period during which the equipment is sold. 
B)  record the disposal by reducing the Equipment account and increasing a revenue account; a gain or loss is reported if the decrease and increase are not equal. 
C)  first record Depreciation Expense for the period up to the date of sale, and then record the disposal by increasing Cash and decreasing both Equipment and Accumulated Depreciation; a gain or loss is reported if the proceeds from the sale do not equal the asset's book value. 
D)  record Accumulated Depreciation for the entire current accounting period. 
A)  record Depreciation Expense for the entire accounting period during which the equipment is sold. 
B)  record the disposal by reducing the Equipment account and increasing a revenue account; a gain or loss is reported if the decrease and increase are not equal. 
C)  first record Depreciation Expense for the period up to the date of sale, and then record the disposal by increasing Cash and decreasing both Equipment and Accumulated Depreciation; a gain or loss is reported if the proceeds from the sale do not equal the asset's book value. 
D)  record Accumulated Depreciation for the entire current accounting period.

Question 5

A company would most likely choose the double-declining balance depreciation method for which of the following long-lived tangible assets?

Accepted Answer

A)  Vehicles 
B)  Office buildings 
C)  Warehouses 
D)  Land improvements 
A)  Vehicles 
B)  Office buildings 
C)  Warehouses 
D)  Land improvements

Question 6

A company bought a piece of equipment for $40,000 and expects to use it for eight years.The company then plans to sell it for $3,500.The company has already recorded depreciation of $35,995.Using the double-declining-balance method,what is the company's annual depreciation expense for the upcoming year?

Accepted Answer

A)  $1,001 
B)  $9,125 
C)  $505 
D)  $10,000 
A)  $1,001 
B)  $9,125 
C)  $505 
D)  $10,000

Question 7

Fixed assets are ______ and are found on the ______:

Accepted Answer

A)  long-lived tangible assets, balance sheet 
B)  long-lived intangible assets, balance sheet 
C)  current tangible assets, balance sheet 
D)  current intangible assets, income statement 
A)  long-lived tangible assets, balance sheet 
B)  long-lived intangible assets, balance sheet 
C)  current tangible assets, balance sheet 
D)  current intangible assets, income statement

Question 8

If Company A has a contractual right to sell certain products or services,use certain trademarks,or perform activities in a certain geographical regions,then Company A has:

Accepted Answer

A)  a trademark. 
B)  a copyright. 
C)  goodwill. 
D)  a franchise. 
A)  a trademark. 
B)  a copyright. 
C)  goodwill. 
D)  a franchise.

Question 9

Your company rents computers to local businesses and schools.You have 1,000 computers with a book value of $160,000.As a result of changing technology,your computers are more difficult to rent so you must drastically reduce your rental price,which causes a decrease in estimated future cash flows.The fair value of the computers is estimated to be $125,000 because of their outdated technology.Your company should report an asset impairment loss of:

Accepted Answer

A)  $160,000. 
B)  $125,000. 
C)  $35,000. 
D)  $0. 
A)  $160,000. 
B)  $125,000. 
C)  $35,000. 
D)  $0.

Question 10

Which of the following assets would be amortized?

Accepted Answer

A)  Land improvements 
B)  Trademarks 
C)  Goodwill 
D)  Franchise 
A)  Land improvements 
B)  Trademarks 
C)  Goodwill 
D)  Franchise

Question 11

Which of the following statements regarding goodwill is not correct?

Accepted Answer

A)  Goodwill is not amortized. 
B)  Goodwill is tested annually for impairment. 
C)  Goodwill is written down if its value is found to be impaired. 
D)  Private companies amortize goodwill using the straight-line method over 20 years or less. 
A)  Goodwill is not amortized. 
B)  Goodwill is tested annually for impairment. 
C)  Goodwill is written down if its value is found to be impaired. 
D)  Private companies amortize goodwill using the straight-line method over 20 years or less.

Question 12

A fixed asset turnover ratio of 4.3 indicates that for every:

Accepted Answer

A)  $1 in sales revenue, the firm acquired $4.30 of assets. 
B)  $1 in fixed assets, the firm earned $4.30 of net income. 
C)  $1 in assets, the firm paid $4.30 of expenses. 
D)  $1 in fixed assets, the firm generated $4.30 of net sales. 
A)  $1 in sales revenue, the firm acquired $4.30 of assets. 
B)  $1 in fixed assets, the firm earned $4.30 of net income. 
C)  $1 in assets, the firm paid $4.30 of expenses. 
D)  $1 in fixed assets, the firm generated $4.30 of net sales.

Question 13

The following information is available from the accounting records of the Bright Company:
 
What is the fixed asset turnover ratio?

Accepted Answer

A)  0.10 times 
B)  3 times 
C)  3.27 times 
D)  10 times 
A)  0.10 times 
B)  3 times 
C)  3.27 times 
D)  10 times

Question 14

Baldini's Restaurant purchased a new building with the surrounding land.The price paid was $1,200,000,including the commission charged on the sale.An appraisal of the land and building at the time of purchase indicated that the market value of the land was $1,000,000 and the market value of the building was $500,000.What amounts would be recorded for the purchase of the two assets?

Accepted Answer

A)  Land $800,000, Building $400,000 
B)  Land $1,000,000, Building $500,000 
C)  Land $1,000,000, Building $200,000 
D)  Land $700,000, Building $500,000 
A)  Land $800,000, Building $400,000 
B)  Land $1,000,000, Building $500,000 
C)  Land $1,000,000, Building $200,000 
D)  Land $700,000, Building $500,000

Question 15

City View Limousine depreciates its stretch Hummer using the units-of-production depreciation method and bases usage on the miles driven per year.The estimated useful life of the vehicle is 250,000 miles.The vehicle was purchased for $115,000 and is not expected to have any residual value at the end of its life.It was driven a total of 40,000 miles during the first year of its useful life and 25,000 miles during the second year.What is the amount of Accumulated Depreciation recorded on the vehicle at the end of those two years?

Accepted Answer

A)  $70,769 
B)  $29,900 
C)  $46,000 
D)  $18,400 
A)  $70,769 
B)  $29,900 
C)  $46,000 
D)  $18,400

Question 16

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Accepted Answer

A)  A smaller fixed asset turnover ratio and a smaller gain on asset disposal 
B)  A larger fixed asset turnover ratio and a larger gain on asset disposal 
C)  A smaller fixed asset turnover ratio and a larger gain on asset disposal 
D)  A larger fixed asset turnover ratio and a smaller gain on asset disposal 
A)  A smaller fixed asset turnover ratio and a smaller gain on asset disposal 
B)  A larger fixed asset turnover ratio and a larger gain on asset disposal 
C)  A smaller fixed asset turnover ratio and a larger gain on asset disposal 
D)  A larger fixed asset turnover ratio and a smaller gain on asset disposal

Question 17

Which of the following statements about straight-line depreciation is correct?

Accepted Answer

A)  Straight-line depreciation is the most common method of depreciation used in the U.S. for financial reporting, but is not commonly used for taxes. 
B)  When the straight-line method is used to compute depreciation, an asset's carrying value remains constant over the life of the asset. 
C)  Straight-line depreciation is an approved method to allocate the cost of an asset to expense and it serves as a measure of the physical decline in the asset. 
D)  The straight line method of depreciation results in a straight-line increase of depreciation expense over the life of an asset. 
A)  Straight-line depreciation is the most common method of depreciation used in the U.S. for financial reporting, but is not commonly used for taxes. 
B)  When the straight-line method is used to compute depreciation, an asset's carrying value remains constant over the life of the asset. 
C)  Straight-line depreciation is an approved method to allocate the cost of an asset to expense and it serves as a measure of the physical decline in the asset. 
D)  The straight line method of depreciation results in a straight-line increase of depreciation expense over the life of an asset.

Question 18

A company sells equipment for $450,000 when the book value of the equipment is $400,000.The company would record the extra $50,000 as:

Accepted Answer

A)  a gain, increasing net income and stockholders' equity. 
B)  revenue, increasing net income and stockholders' equity. 
C)  expenses, decreasing net income and stockholders' equity. 
D)  a loss, decreasing net income and stockholders' equity. 
A)  a gain, increasing net income and stockholders' equity. 
B)  revenue, increasing net income and stockholders' equity. 
C)  expenses, decreasing net income and stockholders' equity. 
D)  a loss, decreasing net income and stockholders' equity.

Question 19

The balance sheet category "Intangible Assets" includes:

Accepted Answer

A)  patents, trademarks, and franchises. 
B)  equipment, land, and buildings. 
C)  investments, receivables, and cash. 
D)  goodwill, inventory, and vehicles. 
A)  patents, trademarks, and franchises. 
B)  equipment, land, and buildings. 
C)  investments, receivables, and cash. 
D)  goodwill, inventory, and vehicles.

Question 20

Choose the letter of the appropriate category to match each asset described.
Asset
1.______ Warehouse
2.______ Licensing rights
3.______ Supplies
4.______ Patents
5.______ Production equipment
6.______ Goodwill
7.______ Land
8.______ Office computer
Category
T - Tangible long-lived asset
I - Intangible long-lived asset
N - Not a long-lived asset

Accepted Answer

1.T
2.I
3.

If net sales revenue and the average book value of fixed assets both rise 5%:

Which of the following statements about tangible long-lived assets is not correct?

Beta Co.recorded a loss due to impairment of some of its assets.As a result of this journal entry:

When a company sells equipment for cash on a date other than the last day of the accounting period,it must:

A company would most likely choose the double-declining balance depreciation method for which of the following long-lived tangible assets?

Fixed assets are and are found on the :

If Company A has a contractual right to sell certain products or services,use certain trademarks,or perform activities in a certain geographical regions,then Company A has:

Which of the following assets would be amortized?

Which of the following statements regarding goodwill is not correct?

A fixed asset turnover ratio of 4.3 indicates that for every:

The following information is available from the accounting records of the Bright Company: What is the fixed asset turnover ratio?

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Which of the following statements about straight-line depreciation is correct?

A company sells equipment for $450,000 when the book value of the equipment is $400,000.The company would record the extra $50,000 as:

The balance sheet category "Intangible Assets" includes:

Choose the letter of the appropriate category to match each asset described. Asset 1. Warehouse 2. Licensing rights 3. Supplies 4. Patents 5. Production equipment 6. Goodwill 7. Land 8. Office computer Category T - Tangible long-lived asset I - Intangible long-lived asset N - Not a long-lived asset

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

If net sales revenue and the average book value of fixed assets both rise 5%:

Which of the following statements about tangible long-lived assets is not correct?

Beta Co.recorded a loss due to impairment of some of its assets.As a result of this journal entry:

When a company sells equipment for cash on a date other than the last day of the accounting period,it must:

A company would most likely choose the double-declining balance depreciation method for which of the following long-lived tangible assets?

Fixed assets are ______ and are found on the ______:

If Company A has a contractual right to sell certain products or services,use certain trademarks,or perform activities in a certain geographical regions,then Company A has:

Which of the following assets would be amortized?

Which of the following statements regarding goodwill is not correct?

A fixed asset turnover ratio of 4.3 indicates that for every:

The following information is available from the accounting records of the Bright Company: What is the fixed asset turnover ratio?

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Which of the following statements about straight-line depreciation is correct?

A company sells equipment for $450,000 when the book value of the equipment is $400,000.The company would record the extra $50,000 as:

The balance sheet category "Intangible Assets" includes:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Fixed assets are and are found on the :