Question 1

Match these terms with their correct definition.
-Tangible operating assets used in the normal operations of a business

Accepted Answer

A) Franchise 
B) Intangible operating assets 
C) Natural resources 
D) Operating assets 
E) Organizational costs
F)Property, plant, and equipment
G)Trademark
H)Voluntary disposal

Question 2

A company sold equipment at a loss. What is the impact on the balance sheet of removing the equipment account and its related accumulated depreciation account?

Accepted Answer

A) reduces total assets 
B) increases total assets 
C) has no effect on total assets 
D) increase total assets and decrease total equity

Question 3

The more efficiently a company uses its fixed assets the lower will be the fixed asset turnover ratio.

Accepted Answer

A) True 
 B)False

Question 4

When plant assets are reported, the current period's depreciation expense is subtracted from the original cost on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 5

For each of the following items, indicate whether each would be treated as capital expenditure or revenue expenditure. (Choices may be used more than once.)
-Costs incurred after putting the asset into service which keep the asset in normal operating condition.

Accepted Answer

A) capital expenditure 
B) revenue expenditure

Question 6

On January 1 (the beginning of the year), a company sold a piece of equipment for $30,000 which it had used for several years. The equipment had cost $45,000, and its accumulated depreciation amounted to $20,000 at the time of the sale. What are the net effects on the accounting equation of selling the equipment for the year?

Accepted Answer

A) Assets and Shareholders' Equity increase $30,000 
B) Assets decrease and Shareholders' Equity increases $5,000. 
C) Assets and Shareholders' Equity increase $5,000. 
D) Assets and Shareholders' Equity decrease $5,000.

Question 7

Below are several accounts and balances from the current year financial statements for Fripp, Inc. Prepare the intangible asset section of the company's balance sheet, as well as a partial income statement in the space provided below using the accounts provided.
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Accepted Answer

The answer of Below are several accounts and balances from...

Question 8

A construction company purchased a piece of equipment with a price of $100,000 on March 1 of the current year. The amounts are related to the equipment purchase. Match the items and explain how each item should be accounted for. (Choices may be used more than once.)
-During the installation, the equipment was damaged and repair costs of $2,000 were incurred.

Accepted Answer

A) This item should be included as part of the cost of the equipment. 
B) This item should be considered a revenue expenditure.

Question 9

How should intangible assets be disclosed on the balance sheet?

Accepted Answer

A) as a reduction of stockholders' equity 
B) at cost in the current assets section 
C) at the estimated market value at the balance sheet date 
D) net of the costs already amortized

Question 10

Fuzziwig's Candles has two intangible assets. Information concerning each is provided in the following table:  Calculate the amount of amortization expense that should be reported for 2019.

Accepted Answer

The answer of Fuzziwig's Candles has two intangible assets. Information...

Question 11

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

Accepted Answer

A) True 
 B)False

Question 12

FASB allows companies to use different depreciation methods so they can capture declining service potential of an operating asset.

Accepted Answer

A) True 
 B)False

Question 13

You have determined that a company uses straight line depreciation. However, the depreciation expense is different than you expected it to be. What could be the reason for this difference?

Accepted Answer

A) different residual values 
B) same residual values 
C) same useful lives 
D) cannot be determined

Exam 7: Operating Assets

Match these terms with their correct definition. -Tangible operating assets used in the normal operations of a business

A company sold equipment at a loss. What is the impact on the balance sheet of removing the equipment account and its related accumulated depreciation account?

The more efficiently a company uses its fixed assets the lower will be the fixed asset turnover ratio.

When plant assets are reported, the current period's depreciation expense is subtracted from the original cost on the balance sheet.

For each of the following items, indicate whether each would be treated as capital expenditure or revenue expenditure. (Choices may be used more than once.) -Costs incurred after putting the asset into service which keep the asset in normal operating condition.

Below are several accounts and balances from the current year financial statements for Fripp, Inc. Prepare the intangible asset section of the company's balance sheet, as well as a partial income statement in the space provided below using the accounts provided. ​

How should intangible assets be disclosed on the balance sheet?

Fuzziwig's Candles has two intangible assets. Information concerning each is provided in the following table: Calculate the amount of amortization expense that should be reported for 2019.

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

FASB allows companies to use different depreciation methods so they can capture declining service potential of an operating asset.

You have determined that a company uses straight line depreciation. However, the depreciation expense is different than you expected it to be. What could be the reason for this difference?

Below are several accounts and balances from the current year financial statements for Fripp, Inc. Prepare the intangible asset section of the company's balance sheet, as well as a partial income statement in the space provided below using the accounts provided.