Question 1

A gain is recorded on the sale of fixed assets when:

Accepted Answer

A) the asset is sold for a price less than its book value. 
B) the asset is sold for a price more than its book value. 
C) accumulated depreciation on asset is less than its selling price. 
D) accumulated depreciation on asset is more than its selling price. 
A) the asset is sold for a price less than its book value. 
B) the asset is sold for a price more than its book value. 
C) accumulated depreciation on asset is less than its selling price. 
D) accumulated depreciation on asset is more than its selling price.

Question 2

Which of the following is a characteristic of accumulated depreciation account?

Accepted Answer

A) Accumulated depreciation represents cash reserved for asset replacement. 
B) Accumulated depreciation account is a contra-liability account. 
C) Accumulated depreciation may be disclosed in the notes to the income statement. 
D) Accumulated depreciation is reported on the balance sheet as a deduction from the cost of the asset. 
A) Accumulated depreciation represents cash reserved for asset replacement. 
B) Accumulated depreciation account is a contra-liability account. 
C) Accumulated depreciation may be disclosed in the notes to the income statement. 
D) Accumulated depreciation is reported on the balance sheet as a deduction from the cost of the asset.

Question 3

The balance in Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a characteristic of fixed assets?

Accepted Answer

A) Fixed assets are offered for sale as part of normal operations. 
B) Fixed assets do not exist physically. 
C) Fixed assets are long-term or relatively permanent assets. 
D) Fixed assets that are no longer used in operations are still classified as fixed assets. 
A) Fixed assets are offered for sale as part of normal operations. 
B) Fixed assets do not exist physically. 
C) Fixed assets are long-term or relatively permanent assets. 
D) Fixed assets that are no longer used in operations are still classified as fixed assets.

Question 5

Machine with a useful life of 5 years and a residual value of $6,000 was purchased on January 3,2015,for $48,500.The machine was sold on January 5,2020,for $13,000.

Accepted Answer

(a) $6,000 = ($48,500 - $42,500) Assets

Question 6

Which of the following is a fixed asset?

Accepted Answer

A) Cash 
B) Equipment 
C) Land held for investment 
D) Notes receivable 
A) Cash 
B) Equipment 
C) Land held for investment 
D) Notes receivable

Question 7

Book value is computed as:

Accepted Answer

A) current market value less residual value. 
B) cost less residual value. 
C) current market value less accumulated depreciation. 
D) cost less accumulated depreciation. 
A) current market value less residual value. 
B) cost less residual value. 
C) current market value less accumulated depreciation. 
D) cost less accumulated depreciation.

Question 8

A current asset account must be increased for revenue expenditures since they benefit only the current period.

Accepted Answer

A) True 
 B)False

Question 9

Intangible assets do not exist physically.

Accepted Answer

A) True 
 B)False

Question 10

Long-lived assets that are intangible in nature,used in the operations of the business,and not held for sale in the ordinary course of business are called fixed assets.

Accepted Answer

A) True 
 B)False

Question 11

A drilling company purchased a mining site for $450,000 on July 1,2015.The company expects to mine ore for the next 10 years and anticipates that a total of 80,000 tons will be recovered.During 2015,the company extracted 5,800 tons of ore.The depletion expense for the year 2015 is:

Accepted Answer

A) $45,000. 
B) $50,800. 
C) $5,860. 
D) $32,625. 
A) $45,000. 
B) $50,800. 
C) $5,860. 
D) $32,625.

Question 12

Which of the following is true of fixed asset turnover?

Accepted Answer

A) It measures the efficiency with which a company uses its fixed assets to generate sales. 
B) It measures the proportion of fixed assets to total assets. 
C) It uses net purchases as a denominator in its calculation. 
D) It measures the profits generated by the fixed and current assets of the company. 
A) It measures the efficiency with which a company uses its fixed assets to generate sales. 
B) It measures the proportion of fixed assets to total assets. 
C) It uses net purchases as a denominator in its calculation. 
D) It measures the profits generated by the fixed and current assets of the company.

Question 13

Companies usually compute depletion by using the double-declining-balance method.

Accepted Answer

A) True 
 B)False

Question 14

If a capital expenditure is treated as a revenue expenditure,then:

Accepted Answer

A) expenses are overstated and owners' equity is understated. 
B) expenses are understated and assets are overstated. 
C) expenses are understated and owners' equity is overstated. 
D) net income is overstated and owners' equity is understated. 
A) expenses are overstated and owners' equity is understated. 
B) expenses are understated and assets are overstated. 
C) expenses are understated and owners' equity is overstated. 
D) net income is overstated and owners' equity is understated.

Question 15

The estimated amount that an asset can be sold for at the end of its useful life is called its book value.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following should be included in the acquisition cost of a piece of equipment?

Accepted Answer

A) Uninsured theft 
B) Mistakes in installation 
C) Vandalism 
D) Installation costs 
A) Uninsured theft 
B) Mistakes in installation 
C) Vandalism 
D) Installation costs

Question 17

Paleota Company purchased a patent from Finise for $234,000.At the time of purchase,the patent had a remaining useful life of 10 years.Determine the patent amortization expense for the first year.

Accepted Answer

A) $23,400 
B) $23,000 
C) $14,000 
D) $9,800 
A) $23,400 
B) $23,000 
C) $14,000 
D) $9,800

Question 18

Fixed assets are ordinarily presented in the balance sheet:

Accepted Answer

A) at its current market value. 
B) at its replacement cost. 
C) at its cost less accumulated depreciation. 
D) under intangible assets. 
A) at its current market value. 
B) at its replacement cost. 
C) at its cost less accumulated depreciation. 
D) under intangible assets.

Question 19

Recording depreciation:

Accepted Answer

A) decreases net income and cash flows. 
B) decreases net income but has no effect on cash flows. 
C) decreases net income,fixed assets,and cash flows. 
D) decreases net income but has no effect on fixed assets and cash flows. 
A) decreases net income and cash flows. 
B) decreases net income but has no effect on cash flows. 
C) decreases net income,fixed assets,and cash flows. 
D) decreases net income but has no effect on fixed assets and cash flows.

Question 20

Which type of depreciation occurs when an asset can no longer provide services for which it was intended?

Accepted Answer

A) Physical depreciation 
B) Market depreciation 
C) Cost depreciation 
D) Functional depreciation 
A) Physical depreciation 
B) Market depreciation 
C) Cost depreciation 
D) Functional depreciation

A gain is recorded on the sale of fixed assets when:

Which of the following is a characteristic of accumulated depreciation account?

The balance in Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.

Which of the following is a characteristic of fixed assets?

Machine with a useful life of 5 years and a residual value of $6,000 was purchased on January 3,2015,for $48,500.The machine was sold on January 5,2020,for $13,000.

Which of the following is a fixed asset?

Book value is computed as:

A current asset account must be increased for revenue expenditures since they benefit only the current period.

Intangible assets do not exist physically.

Long-lived assets that are intangible in nature,used in the operations of the business,and not held for sale in the ordinary course of business are called fixed assets.

A drilling company purchased a mining site for $450,000 on July 1,2015.The company expects to mine ore for the next 10 years and anticipates that a total of 80,000 tons will be recovered.During 2015,the company extracted 5,800 tons of ore.The depletion expense for the year 2015 is:

Which of the following is true of fixed asset turnover?

Companies usually compute depletion by using the double-declining-balance method.

If a capital expenditure is treated as a revenue expenditure,then:

The estimated amount that an asset can be sold for at the end of its useful life is called its book value.

Which of the following should be included in the acquisition cost of a piece of equipment?

Paleota Company purchased a patent from Finise for $234,000.At the time of purchase,the patent had a remaining useful life of 10 years.Determine the patent amortization expense for the first year.

Fixed assets are ordinarily presented in the balance sheet:

Recording depreciation:

Which type of depreciation occurs when an asset can no longer provide services for which it was intended?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 7: Fixed Assets and Intangible Assets

A gain is recorded on the sale of fixed assets when:

Which of the following is a characteristic of accumulated depreciation account?

The balance in Accumulated Depreciation account is deducted from the cost of fixed assets on the balance sheet.

Which of the following is a characteristic of fixed assets?

Machine with a useful life of 5 years and a residual value of $6,000 was purchased on January 3,2015,for $48,500.The machine was sold on January 5,2020,for $13,000.

Which of the following is a fixed asset?

Book value is computed as:

A current asset account must be increased for revenue expenditures since they benefit only the current period.

Intangible assets do not exist physically.

Long-lived assets that are intangible in nature,used in the operations of the business,and not held for sale in the ordinary course of business are called fixed assets.

A drilling company purchased a mining site for $450,000 on July 1,2015.The company expects to mine ore for the next 10 years and anticipates that a total of 80,000 tons will be recovered.During 2015,the company extracted 5,800 tons of ore.The depletion expense for the year 2015 is:

Which of the following is true of fixed asset turnover?

Companies usually compute depletion by using the double-declining-balance method.

If a capital expenditure is treated as a revenue expenditure,then:

The estimated amount that an asset can be sold for at the end of its useful life is called its book value.

Which of the following should be included in the acquisition cost of a piece of equipment?

Paleota Company purchased a patent from Finise for $234,000.At the time of purchase,the patent had a remaining useful life of 10 years.Determine the patent amortization expense for the first year.

Fixed assets are ordinarily presented in the balance sheet:

Recording depreciation:

Which type of depreciation occurs when an asset can no longer provide services for which it was intended?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters