Question 1

Expenditures made after the asset is in use are always capital expenditures.

Accepted Answer

A) True 
 B)False

Question 2

The book value of an operational asset initially declines less rapidly under the straight-line method than under the declining-balance method.

Accepted Answer

A) True 
 B)False

Question 3

Tangible operational assets differ from intangible operational assets in that tangible assets have physical substance whereas intangible assets have no physical substance.

Accepted Answer

A) True 
 B)False

Question 4

Residual value is which of the following?

Accepted Answer

A) Equal to the acquisition cost of a tangible operational asset. 
B) The same as book value of an asset. 
C) The amount expected to be recovered when an asset is disposed of at the end of its estimated useful life. 
D) The current value of an asset as of the statement of financial position date. 
A) Equal to the acquisition cost of a tangible operational asset. 
B) The same as book value of an asset. 
C) The amount expected to be recovered when an asset is disposed of at the end of its estimated useful life. 
D) The current value of an asset as of the statement of financial position date.

Question 5

It is illegal to maintain two sets of books so we must adopt the same amortization method for both financial reporting and tax reporting.

Accepted Answer

A) True 
 B)False

Question 6

The following information is available for C Co.and P Co:
(1)Compute the fixed asset turnover ratio for the year for both C Co.and P Co.
a.C Co.__________
b.P Co.__________

Accepted Answer

(1)a.5.08 ($18,813/[

Question 7

Angstrom Corporation purchased a truck at a cost of $60,000.It has an estimated useful life of five years and estimated residual value of $5,000.At the beginning of year three,Angstrom's managers concluded that the total useful life would be four years,rather than five.There was no change in the estimated residual value.What is the amount of depreciation that Angstrom should record for year 3 under the straight-line method?

Accepted Answer

A) $8,250 
B) $11,000 
C) $15,500 
D) $16,500 
A) $8,250 
B) $11,000 
C) $15,500 
D) $16,500

Question 8

What is an extraordinary repair to a building?

Accepted Answer

A) It is a revenue expenditure and it is debited to an expense account. 
B) It is a capital expenditure and it is debited to an asset account. 
C) It is a capital expenditure and it is debited to an expense account. 
D) It is a revenue expenditure and may be debited to accumulated depreciation. 
A) It is a revenue expenditure and it is debited to an expense account. 
B) It is a capital expenditure and it is debited to an asset account. 
C) It is a capital expenditure and it is debited to an expense account. 
D) It is a revenue expenditure and may be debited to accumulated depreciation.

Question 9

A change in the estimated useful life of a tangible operational asset may be required due to economic or technological changes.

Accepted Answer

A) True 
 B)False

Question 10

Jeffers Inc.purchased a warehouse and the land upon which it was located.The total price was $450,000.The land was appraised for $180,000 while the warehouse was appraised for $360,000.What account balances should Jeffers show in its general ledger?

Accepted Answer

A) Land $180,000; Warehouse $360,000 
B) Land $150,000; Warehouse $300,000 
C) Land $166,667; Warehouse $333,333 
D) Land $150,000; Warehouse $350,000 
A) Land $180,000; Warehouse $360,000 
B) Land $150,000; Warehouse $300,000 
C) Land $166,667; Warehouse $333,333 
D) Land $150,000; Warehouse $350,000

Question 11

How should an expenditure for an ordinary repair to factory equipment be recorded?

Accepted Answer

A) As an expense in the period incurred. 
B) Debited to an asset account but not depreciated over future years. 
C) Debited to an asset account and depreciated over the current and future years. 
D) Debited to accumulated depreciation. 
A) As an expense in the period incurred. 
B) Debited to an asset account but not depreciated over future years. 
C) Debited to an asset account and depreciated over the current and future years. 
D) Debited to accumulated depreciation.

Question 12

Airbury Company acquired manufacturing equipment at an invoice price of $80,000 and paid $750 to have it delivered to the factory.$400 was spent to repair a door that was damaged while installing the equipment.At what amount should this equipment be recorded on the company's books?

Accepted Answer

A) $80,000 
B) $80,400 
C) $80,750 
D) $81,150 
A) $80,000 
B) $80,400 
C) $80,750 
D) $81,150

Question 13

Which of the following would not be included in the acquisition cost of a building?

Accepted Answer

A) An apportioned amount of the purchase cost when both the land and building are acquired in a basket purchase. 
B) The cost of putting new windows and doors in the building before it opens for operations. 
C) The cost of paving the parking lot and outdoor lighting in the lot. 
D) The cost of paying an architect to design the remodelling modifications of the building before the store opens. 
A) An apportioned amount of the purchase cost when both the land and building are acquired in a basket purchase. 
B) The cost of putting new windows and doors in the building before it opens for operations. 
C) The cost of paving the parking lot and outdoor lighting in the lot. 
D) The cost of paying an architect to design the remodelling modifications of the building before the store opens.

Question 14

In accounting for depreciation,acquisition cost and useful life usually are known quantities,whereas residual value is an estimate because it relates to an amount in the future.

Accepted Answer

A) True 
 B)False

Question 15

Soule Corporation purchased a machine that had an original cost of $60,000 and an estimated residual value of $10,000.The useful life was expected to be 8 years and straight-line depreciation is used.At the end of 20E,the book value of the machine was $35,000.Soule sold the machine for $32,000 cash on October 1,20F.
Required:A.Prepare the journal entry to record depreciation for 20F up to the date of sale.Round the amount to the nearest dollar.B.Prepare the journal entry to record the sale of the machine.

Accepted Answer

Computations: ($60,0

Question 16

In conformity with the historical cost principle,cost (less any estimated residual value)is allocated to periodic expense over the periods benefited.

Accepted Answer

A) True 
 B)False

Question 17

The Land account would include all of the following costs except

Accepted Answer

A) drainage costs. 
B) the cost of building a fence. 
C) title fees. 
D) the cost of tearing down a building. 
A) drainage costs. 
B) the cost of building a fence. 
C) title fees. 
D) the cost of tearing down a building.

Question 18

Which of the following is true of depletion recorded for natural resources?

Accepted Answer

A) It recognizes increases in market value with the passage of time. 
B) It matches the cost of resources used up with the revenues that are earned. 
C) It is also recorded on buildings and equipment used in extracting the resource. 
D) It is determined by a method similar to declining balance depreciation. 
A) It recognizes increases in market value with the passage of time. 
B) It matches the cost of resources used up with the revenues that are earned. 
C) It is also recorded on buildings and equipment used in extracting the resource. 
D) It is determined by a method similar to declining balance depreciation.

Question 19

When an operational asset is acquired for non cash consideration,the cost of the asset received always is measured as the book value of the non cash consideration given up.

Accepted Answer

A) True 
 B)False

Question 20

Belton Corporation uses straight-line depreciation and,for assets acquired during the fiscal year,follows the policy of recording a full month's depreciation for all assets acquired on or before the 15th of the month.No depreciation is recorded for the month if an asset is acquired after the 15th.On May 22,20A,Belton purchased a car that cost $22,000 which had an estimated residual value of $2,000 and an estimated useful life of five years.To the nearest dollar,what is the amount of depreciation that should be recorded on the car for 20A?

Accepted Answer

A) $2,000 
B) $2,333 
C) $2,667 
D) $4,000 
A) $2,000 
B) $2,333 
C) $2,667 
D) $4,000

Expenditures made after the asset is in use are always capital expenditures.

The book value of an operational asset initially declines less rapidly under the straight-line method than under the declining-balance method.

Tangible operational assets differ from intangible operational assets in that tangible assets have physical substance whereas intangible assets have no physical substance.

Residual value is which of the following?

It is illegal to maintain two sets of books so we must adopt the same amortization method for both financial reporting and tax reporting.

The following information is available for C Co.and P Co: (1)Compute the fixed asset turnover ratio for the year for both C Co.and P Co. a.C Co. b.P Co.

What is an extraordinary repair to a building?

A change in the estimated useful life of a tangible operational asset may be required due to economic or technological changes.

Jeffers Inc.purchased a warehouse and the land upon which it was located.The total price was $450,000.The land was appraised for $180,000 while the warehouse was appraised for $360,000.What account balances should Jeffers show in its general ledger?

How should an expenditure for an ordinary repair to factory equipment be recorded?

Airbury Company acquired manufacturing equipment at an invoice price of $80,000 and paid $750 to have it delivered to the factory.$400 was spent to repair a door that was damaged while installing the equipment.At what amount should this equipment be recorded on the company's books?

Which of the following would not be included in the acquisition cost of a building?

In accounting for depreciation,acquisition cost and useful life usually are known quantities,whereas residual value is an estimate because it relates to an amount in the future.

In conformity with the historical cost principle,cost (less any estimated residual value)is allocated to periodic expense over the periods benefited.

The Land account would include all of the following costs except

Which of the following is true of depletion recorded for natural resources?

When an operational asset is acquired for non cash consideration,the cost of the asset received always is measured as the book value of the non cash consideration given up.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Filters

Exam 9: Reporting and Interpreting Liabilities

Expenditures made after the asset is in use are always capital expenditures.

The book value of an operational asset initially declines less rapidly under the straight-line method than under the declining-balance method.

Tangible operational assets differ from intangible operational assets in that tangible assets have physical substance whereas intangible assets have no physical substance.

Residual value is which of the following?

It is illegal to maintain two sets of books so we must adopt the same amortization method for both financial reporting and tax reporting.

The following information is available for C Co.and P Co: (1)Compute the fixed asset turnover ratio for the year for both C Co.and P Co. a.C Co.__________ b.P Co.__________

What is an extraordinary repair to a building?

A change in the estimated useful life of a tangible operational asset may be required due to economic or technological changes.

Jeffers Inc.purchased a warehouse and the land upon which it was located.The total price was $450,000.The land was appraised for $180,000 while the warehouse was appraised for $360,000.What account balances should Jeffers show in its general ledger?

How should an expenditure for an ordinary repair to factory equipment be recorded?

Airbury Company acquired manufacturing equipment at an invoice price of $80,000 and paid $750 to have it delivered to the factory.$400 was spent to repair a door that was damaged while installing the equipment.At what amount should this equipment be recorded on the company's books?

Which of the following would not be included in the acquisition cost of a building?

In accounting for depreciation,acquisition cost and useful life usually are known quantities,whereas residual value is an estimate because it relates to an amount in the future.

In conformity with the historical cost principle,cost (less any estimated residual value)is allocated to periodic expense over the periods benefited.

The Land account would include all of the following costs except

Which of the following is true of depletion recorded for natural resources?

When an operational asset is acquired for non cash consideration,the cost of the asset received always is measured as the book value of the non cash consideration given up.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Filters

The following information is available for C Co.and P Co: (1)Compute the fixed asset turnover ratio for the year for both C Co.and P Co. a.C Co. b.P Co.