Question 1

The inventory turnover measures how efficiently a company is generating sales from its property,plant,and equipment.

Accepted Answer

A) True 
 B)False

Question 2

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000,and an estimated useful life of 5 years.Determine the second year's depreciation expense using the straight-line method.

Accepted Answer

A) $10,200 
B) $22,400 
C) $11,200 
D) $12,200 
A) $10,200 
B) $22,400 
C) $11,200 
D) $12,200

Question 3

The straight-line method of depreciation is appropriate if usage of the asset varies considerably from year to year.

Accepted Answer

A) True 
 B)False

Question 4

For each of the following items indicate whether the transactions listed below increased (+),decreased (-)or had no effect (o)by inserting the appropriate symbol.

Accepted Answer

Net Income Assets Liab. Owners' Equity C

Question 5

The double-declining-balance method of depreciation is also referred to as an accelerated depreciation method.

Accepted Answer

A) True 
 B)False

Question 6

A capital expenditure would appear on the:

Accepted Answer

A) income statement under operating expenses. 
B) balance sheet under fixed assets. 
C) balance sheet under investments. 
D) income statement under other expenses. 
A) income statement under operating expenses. 
B) balance sheet under fixed assets. 
C) balance sheet under investments. 
D) income statement under other expenses.

Question 7

The acquisition costs of property,plant,and equipment should include all costs necessary to get the asset in place and ready for use.

Accepted Answer

A) True 
 B)False

Question 8

A machine was purchased for $35,500,having a useful life of 10 years,and a residual value of $6,000.Compute the annual depreciation expense using the straight-line method.

Accepted Answer

A) $3,550 
B) $4,150 
C) $5,800 
D) $2,950 
A) $3,550 
B) $4,150 
C) $5,800 
D) $2,950

Question 9

Which of the following statement is true about intangible assets?

Accepted Answer

A) They are usually presented in the balance sheet as fixed assets. 
B) They are short-lived assets. 
C) They are not held for resale. 
D) They have physical existence. 
A) They are usually presented in the balance sheet as fixed assets. 
B) They are short-lived assets. 
C) They are not held for resale. 
D) They have physical existence.

Question 10

A fully depreciated asset must be:

Accepted Answer

A) removed from the books. 
B) kept on the books until sold or discarded. 
C) disclosed only in the notes to the financial statements. 
D) recognized on the income statement as a loss. 
A) removed from the books. 
B) kept on the books until sold or discarded. 
C) disclosed only in the notes to the financial statements. 
D) recognized on the income statement as a loss.

Question 11

A company sold office furniture costing $15,800 with accumulated depreciation of $13,000 for $1,500 cash.The entry to record the sale would include:

Accepted Answer

A) an increase in accumulated depreciation for $15,800. 
B) a loss for $1300. 
C) a total decrease in office furniture for $2,800. 
D) a decrease in cash for $1,300. 
A) an increase in accumulated depreciation for $15,800. 
B) a loss for $1300. 
C) a total decrease in office furniture for $2,800. 
D) a decrease in cash for $1,300.

Question 12

The difference between a fixed asset's initial cost and its current market value is called the asset's depreciable cost.

Accepted Answer

A) True 
 B)False

Question 13

A patent was purchased for $585,000 with a legal life of 20 years.Management estimates that the patent has an 12- year economic life.The entry to record amortization would include:

Accepted Answer

A) an increase in amortization expense for $29,250. 
B) an increase in research and development expense for $585,000. 
C) a decrease in patent for $48,750. 
D) an increase in accumulated amortization for $585,000. 
A) an increase in amortization expense for $29,250. 
B) an increase in research and development expense for $585,000. 
C) a decrease in patent for $48,750. 
D) an increase in accumulated amortization for $585,000.

Question 14

If a company sells a fixed asset for an amount which is less than its book value,a gain must be recognized.

Accepted Answer

A) True 
 B)False

Question 15

Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account.

Accepted Answer

A) True 
 B)False

Question 16

Under the straight-line method,the amount of depreciation expense for the first full year of use of a fixed asset costing $95,000,with an estimated residual value of $5,000,and a useful life of 5 years,will be $18,000.

Accepted Answer

A) True 
 B)False

Question 17

Cook Co.incurred the following costs related to the office building used in operating its sports supply company:
(a)	Replaced a broken window.
(b)	Replaced the roof that had been on the building for 23 years.
(c)	Serviced all the air conditioners before summer started.
(d)	Replaced the air conditioners with refrigerated air conditioners in the customer service areas.
(e)	Added a warehouse to the back of the building.
(f)	Repainted the interior walls.
(g)	Installed window shutters on all windows.

Classify each of the costs as a capital expenditure or a revenue expenditure.

Accepted Answer

(a)Revenue expenditure 
(b)Cap

Question 18

You are examining the financial statements of a company.You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million.

Accepted Answer

(a) The patent amortization was arrived

Question 19

On September 1,a machine was purchased for $47,000 with a useful life of 8 years,and a residual value of $3,000.What is the depreciation expense in the year of purchase under straight-line method,assuming a December 31 year- end?

Accepted Answer

A) $3,917 
B) $3,667 
C) $1,958 
D) $1,833 
A) $3,917 
B) $3,667 
C) $1,958 
D) $1,833

Question 20

To measure depreciation,which of the following must be known?

Accepted Answer

A) market value of asset. 
B) fixed asset turnover 
C) cost of asset. 
D) the amount of cash to replace fixed asset 
A) market value of asset. 
B) fixed asset turnover 
C) cost of asset. 
D) the amount of cash to replace fixed asset

The inventory turnover measures how efficiently a company is generating sales from its property,plant,and equipment.

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000,and an estimated useful life of 5 years.Determine the second year's depreciation expense using the straight-line method.

The straight-line method of depreciation is appropriate if usage of the asset varies considerably from year to year.

For each of the following items indicate whether the transactions listed below increased (+),decreased (-)or had no effect (o)by inserting the appropriate symbol.

The double-declining-balance method of depreciation is also referred to as an accelerated depreciation method.

A capital expenditure would appear on the:

The acquisition costs of property,plant,and equipment should include all costs necessary to get the asset in place and ready for use.

A machine was purchased for $35,500,having a useful life of 10 years,and a residual value of $6,000.Compute the annual depreciation expense using the straight-line method.

Which of the following statement is true about intangible assets?

A fully depreciated asset must be:

A company sold office furniture costing $15,800 with accumulated depreciation of $13,000 for $1,500 cash.The entry to record the sale would include:

The difference between a fixed asset's initial cost and its current market value is called the asset's depreciable cost.

A patent was purchased for $585,000 with a legal life of 20 years.Management estimates that the patent has an 12- year economic life.The entry to record amortization would include:

If a company sells a fixed asset for an amount which is less than its book value,a gain must be recognized.

Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account.

Under the straight-line method,the amount of depreciation expense for the first full year of use of a fixed asset costing $95,000,with an estimated residual value of $5,000,and a useful life of 5 years,will be $18,000.

You are examining the financial statements of a company.You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million.

On September 1,a machine was purchased for $47,000 with a useful life of 8 years,and a residual value of $3,000.What is the depreciation expense in the year of purchase under straight-line method,assuming a December 31 year- end?

To measure depreciation,which of the following must be known?

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

Exam 7: Fixed Assets and Intangible Assets

The inventory turnover measures how efficiently a company is generating sales from its property,plant,and equipment.

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000,and an estimated useful life of 5 years.Determine the second year's depreciation expense using the straight-line method.

The straight-line method of depreciation is appropriate if usage of the asset varies considerably from year to year.

For each of the following items indicate whether the transactions listed below increased (+),decreased (-)or had no effect (o)by inserting the appropriate symbol.

The double-declining-balance method of depreciation is also referred to as an accelerated depreciation method.

A capital expenditure would appear on the:

The acquisition costs of property,plant,and equipment should include all costs necessary to get the asset in place and ready for use.

A machine was purchased for $35,500,having a useful life of 10 years,and a residual value of $6,000.Compute the annual depreciation expense using the straight-line method.

Which of the following statement is true about intangible assets?

A fully depreciated asset must be:

A company sold office furniture costing $15,800 with accumulated depreciation of $13,000 for $1,500 cash.The entry to record the sale would include:

The difference between a fixed asset's initial cost and its current market value is called the asset's depreciable cost.

A patent was purchased for $585,000 with a legal life of 20 years.Management estimates that the patent has an 12- year economic life.The entry to record amortization would include:

If a company sells a fixed asset for an amount which is less than its book value,a gain must be recognized.

Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account.

Under the straight-line method,the amount of depreciation expense for the first full year of use of a fixed asset costing $95,000,with an estimated residual value of $5,000,and a useful life of 5 years,will be $18,000.

You are examining the financial statements of a company.You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million.

On September 1,a machine was purchased for $47,000 with a useful life of 8 years,and a residual value of $3,000.What is the depreciation expense in the year of purchase under straight-line method,assuming a December 31 year- end?

To measure depreciation,which of the following must be known?

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