Question 1

Goodwill is defined as:

Accepted Answer

A) assets minus liabilities. 
B) excess of the cost of the purchase of a business over the market value of its net assets. 
C) liabilities minus assets. 
D) the acquisition costs of a franchise. 
A) assets minus liabilities. 
B) excess of the cost of the purchase of a business over the market value of its net assets. 
C) liabilities minus assets. 
D) the acquisition costs of a franchise. B

Question 2

An asset has a cost of $50,000 with a residual value of $10,000.It has a life of 5 years and was purchased on January 1.Its fourth full year of depreciation expense under double-declining-balance will be:

Accepted Answer

A) $7,200. 
B) $4,320. 
C) $800. 
D) $0. 
A) $7,200. 
B) $4,320. 
C) $800. 
D) $0. C

Question 3

Research and development costs (R&D)are generally:

Accepted Answer

A) expensed and become part of the Income Statement. 
B) listed as "other intangibles" on the Balance Sheet. 
C) listed as "current assets" on the Balance Sheet. 
D) listed as "long-term assets" on the Balance Sheet. 
A) expensed and become part of the Income Statement. 
B) listed as "other intangibles" on the Balance Sheet. 
C) listed as "current assets" on the Balance Sheet. 
D) listed as "long-term assets" on the Balance Sheet. A

Question 4

Long-term marketable securities,such as five-year held-to-maturity securities,would be listed last in the long-term assets portion of a company's Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is often rendered obsolete because of technological advancements?

Accepted Answer

A) Patent 
B) Copyright 
C) Franchise 
D) Goodwill 
A) Patent 
B) Copyright 
C) Franchise 
D) Goodwill

Question 6

Ironworks Industries purchased a piece of equipment for $65,000 with an estimated salvage value of $15,000 on January 1.Its estimated life is 5 years.To the nearest dollar,what is the equipment's depreciation using double-declining-balance for year 2?

Accepted Answer

A) $26,000 
B) $20,000 
C) $15,600 
D) $12,000 
A) $26,000 
B) $20,000 
C) $15,600 
D) $12,000

Question 7

Straight-line depreciation is calculated by the formula (cost - salvage value)divided by useful life (generally in years).

Accepted Answer

A) True 
 B)False

Question 8

When a company buys a building,realtor commissions are not included in the cost of the building.

Accepted Answer

A) True 
 B)False

Question 9

A patent has amortization this year of $2,300.The journal entry would be to:

Accepted Answer

A) debit amortization expense-patent,$2,300;credit Accumulated Depreciation-patent,$2,300. 
B) debit accumulated amortization-patent,$2,300;credit patent,$2,300. 
C) debit amortization expense-patent,$2,300;credit patent,$2,300. 
D) debit accumulated amortization-patent,$2,300;credit amortization expense-patent,$2,300. 
A) debit amortization expense-patent,$2,300;credit Accumulated Depreciation-patent,$2,300. 
B) debit accumulated amortization-patent,$2,300;credit patent,$2,300. 
C) debit amortization expense-patent,$2,300;credit patent,$2,300. 
D) debit accumulated amortization-patent,$2,300;credit amortization expense-patent,$2,300.

Question 10

Equipment costing $118,000 has accumulated depreciation of $92,000.The equipment is a trade-in for new equipment costing $187,000.If the trade-in value received for the old equipment is $30,000,the journal entry to record this transaction is to:

Accepted Answer

A) debit Equipment (New)for $187,000,debit Accumulated Depreciation - Equipment for $92,000,credit Equipment (Old)for $118,000 and credit Cash for $161,000. 
B) debit Equipment (New)for $187,000,debit Accumulated Depreciation - Equipment for $92,000,credit Equipment (Old)for $118,000,credit Cash for $157,000,and credit Gain on Exchange of Assets for $4,000. 
C) debit Equipment (New)for $187,000,debit Accumulated Depreciation - Equipment for $92,000,debit Loss on Exchange of Assets for $26,000,credit Equipment (Old)for $118,000 and credit Cash for $187,000. 
D) debit Equipment (New)for $187,000,and credit Cash for $187,000. 
A) debit Equipment (New)for $187,000,debit Accumulated Depreciation - Equipment for $92,000,credit Equipment (Old)for $118,000 and credit Cash for $161,000. 
B) debit Equipment (New)for $187,000,debit Accumulated Depreciation - Equipment for $92,000,credit Equipment (Old)for $118,000,credit Cash for $157,000,and credit Gain on Exchange of Assets for $4,000. 
C) debit Equipment (New)for $187,000,debit Accumulated Depreciation - Equipment for $92,000,debit Loss on Exchange of Assets for $26,000,credit Equipment (Old)for $118,000 and credit Cash for $187,000. 
D) debit Equipment (New)for $187,000,and credit Cash for $187,000.

Question 11

Which of the following would NOT be a part of land improvements?

Accepted Answer

A) Paving of the parking lot 
B) Installing fences around the property 
C) Putting in sidewalks 
D) Grading and leveling the land 
A) Paving of the parking lot 
B) Installing fences around the property 
C) Putting in sidewalks 
D) Grading and leveling the land

Question 12

New equipment was purchased on January 1 for $142,000.It has a salvage value of $28,000 and a useful life of 8 years.To the nearest dollar,how much will the depreciation expense for the equipment be for the first year using the straight-line method?

Accepted Answer

A) $1,188 
B) $17,750 
C) $1,479 
D) $14,250 
A) $1,188 
B) $17,750 
C) $1,479 
D) $14,250

Question 13

Piper Productions inadvertently recorded an expense as a capital expenditure.Which of the following will occur as a result of this mistake?

Accepted Answer

A) Assets will be understated. 
B) Net income will be understated. 
C) Net income will be overstated. 
D) Both A and C will occur. 
A) Assets will be understated. 
B) Net income will be understated. 
C) Net income will be overstated. 
D) Both A and C will occur.

Question 14

The process of allocating the cost of intangible assets to expense is called amortization.

Accepted Answer

A) True 
 B)False

Question 15

A new vehicle was purchased on January 1 for $38,000.It has a salvage value of $7,000 and a useful life of 5 years.To the nearest dollar,how much will the depreciation expense for the vehicle be for the first year using the straight-line method?

Accepted Answer

A) $6,200 
B) $633 
C) $7,600 
D) $517 
A) $6,200 
B) $633 
C) $7,600 
D) $517

Question 16

When determining the cost of a plant asset,GAAP requires the use of the market value principle.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is NOT a classification for marketable securities?

Accepted Answer

A) Saleable securities 
B) Available-for-sale securities 
C) Trading securities 
D) Held-to-maturity securities 
A) Saleable securities 
B) Available-for-sale securities 
C) Trading securities 
D) Held-to-maturity securities

Question 18

The choice of depreciation method depends on the cost of the asset and its' expected useful life.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is NOT true regarding depletion?

Accepted Answer

A) Depletion is the systematic reduction of a natural resource's carrying value on the books. 
B) Depletion is computed in a similar manner to straight-line depreciation. 
C) Depletion is an expense that applies to the natural resources in the same way depreciation applies to fixed assets. 
D) Depletion is an expense that applies to natural resources in the same way amortization applies to intangible assets. 
A) Depletion is the systematic reduction of a natural resource's carrying value on the books. 
B) Depletion is computed in a similar manner to straight-line depreciation. 
C) Depletion is an expense that applies to the natural resources in the same way depreciation applies to fixed assets. 
D) Depletion is an expense that applies to natural resources in the same way amortization applies to intangible assets.

Question 20

Only Organics has a delivery truck that was purchased for $42,000 and has a salvage value of $5,000.It expects the truck to last 125,000 miles.During Year 1,the truck traveled 32,500 miles and during Year 2,the truck traveled 28,500 miles.What is the depreciation expense for Year 2 to the nearest dollar using the units-of-production method? (Round to three decimal places to get the unit rate. )

Accepted Answer

A) $10,920 
B) $9,620 
C) $9,576 
D) $8,436 
A) $10,920 
B) $9,620 
C) $9,576 
D) $8,436

Goodwill is defined as:

An asset has a cost of $50,000 with a residual value of $10,000.It has a life of 5 years and was purchased on January 1.Its fourth full year of depreciation expense under double-declining-balance will be:

Research and development costs (R&D)are generally:

Long-term marketable securities,such as five-year held-to-maturity securities,would be listed last in the long-term assets portion of a company's Balance Sheet.

Which of the following is often rendered obsolete because of technological advancements?

Ironworks Industries purchased a piece of equipment for $65,000 with an estimated salvage value of $15,000 on January 1.Its estimated life is 5 years.To the nearest dollar,what is the equipment's depreciation using double-declining-balance for year 2?

Straight-line depreciation is calculated by the formula (cost - salvage value)divided by useful life (generally in years).

When a company buys a building,realtor commissions are not included in the cost of the building.

A patent has amortization this year of $2,300.The journal entry would be to:

Equipment costing $118,000 has accumulated depreciation of $92,000.The equipment is a trade-in for new equipment costing $187,000.If the trade-in value received for the old equipment is $30,000,the journal entry to record this transaction is to:

Which of the following would NOT be a part of land improvements?

New equipment was purchased on January 1 for $142,000.It has a salvage value of $28,000 and a useful life of 8 years.To the nearest dollar,how much will the depreciation expense for the equipment be for the first year using the straight-line method?

Piper Productions inadvertently recorded an expense as a capital expenditure.Which of the following will occur as a result of this mistake?

The process of allocating the cost of intangible assets to expense is called amortization.

A new vehicle was purchased on January 1 for $38,000.It has a salvage value of $7,000 and a useful life of 5 years.To the nearest dollar,how much will the depreciation expense for the vehicle be for the first year using the straight-line method?

When determining the cost of a plant asset,GAAP requires the use of the market value principle.

Which of the following is NOT a classification for marketable securities?

The choice of depreciation method depends on the cost of the asset and its' expected useful life.

Which of the following is NOT true regarding depletion?

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, internal Control, audits, fraud, and Ethics

Cash and Receivables

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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Exam 8: Long-Term and Other Assets

Goodwill is defined as:

An asset has a cost of $50,000 with a residual value of $10,000.It has a life of 5 years and was purchased on January 1.Its fourth full year of depreciation expense under double-declining-balance will be:

Research and development costs (R&D)are generally:

Long-term marketable securities,such as five-year held-to-maturity securities,would be listed last in the long-term assets portion of a company's Balance Sheet.

Which of the following is often rendered obsolete because of technological advancements?

Ironworks Industries purchased a piece of equipment for $65,000 with an estimated salvage value of $15,000 on January 1.Its estimated life is 5 years.To the nearest dollar,what is the equipment's depreciation using double-declining-balance for year 2?

Straight-line depreciation is calculated by the formula (cost - salvage value)divided by useful life (generally in years).

When a company buys a building,realtor commissions are not included in the cost of the building.

A patent has amortization this year of $2,300.The journal entry would be to:

Equipment costing $118,000 has accumulated depreciation of $92,000.The equipment is a trade-in for new equipment costing $187,000.If the trade-in value received for the old equipment is $30,000,the journal entry to record this transaction is to:

Which of the following would NOT be a part of land improvements?

New equipment was purchased on January 1 for $142,000.It has a salvage value of $28,000 and a useful life of 8 years.To the nearest dollar,how much will the depreciation expense for the equipment be for the first year using the straight-line method?

Piper Productions inadvertently recorded an expense as a capital expenditure.Which of the following will occur as a result of this mistake?

The process of allocating the cost of intangible assets to expense is called amortization.

A new vehicle was purchased on January 1 for $38,000.It has a salvage value of $7,000 and a useful life of 5 years.To the nearest dollar,how much will the depreciation expense for the vehicle be for the first year using the straight-line method?

When determining the cost of a plant asset,GAAP requires the use of the market value principle.

Which of the following is NOT a classification for marketable securities?

The choice of depreciation method depends on the cost of the asset and its' expected useful life.

Which of the following is NOT true regarding depletion?

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, internal Control, audits, fraud, and Ethics

Cash and Receivables

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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