Accounting Final Exam

When straight-line depreciation is in use, the depreciation rate of an asset is equal to: A. 1 divided by the life of the asset. B. 1 divided by the cost of the asset. C. The cost of the asset divided by the life of the asset. D. The cost of the asset less its salvage value divided by the life of the asset

1 divided by the life of the asset

The term net identifiable assets means: A. All assets minus all liabilities. B. All assets except goodwill, minus all liabilities. C. All assets except intangibles, minus all liabilities. D. All fixed assets less liabilities.

all assets except goodwill, minus all liabilites

Throughout the current year, Calverton Company treated sales taxes paid on purchases of plant assets as revenue expenditures. As a result, the current year's: A. Net income is overstated. B. Revenue is overstated. C. Depreciation expense is understated. D. None of the above; payments of sales taxes should be treated as revenue expenditures

depreciation expense is understated

Machinery is purchased on May 15, 2009 for $50,000 with a $5,000 salvage value and a five year life. The half year convention is followed. What method of depreciation will give the highest amount of depreciation expense in year 2? A. Straight line B. Double declining balance C. 150% declining balance D. Amount cannot be determined

double decline balance

Which of the following would not be amortized oil well copyright franchise fee patent

oil well

international accounting standards require that convertible conds be classified on the balance sheet as

part liability, part equity

Which depreciation method is most commonly used among publicly owned corporations? A. Straight-line. B. Double-declining balance. C. Units-of-output. D. All of the various depreciation methods are used equally.

straight line

A gain is recognized on the disposal of plant assets when: A. The sales price is greater than the residual value but less than the book value. B. The sales price is less than both the book value and the residual value. C. The sales price is greater than the book value and greater than the residual value. D. The sales price is greater than the book value and less than the residual value.

the sale price is greater than the book value and greater than the residual value

Refer to the information above. If Victor uses straight-line depreciation with the half-year convention, the book value of the equipment at December 31, 2010 will be: A. $90,000. B. $107,500. C. $106,667. D. $105,000.

107500

Refer to the information above. Assume that in its financial statements, Tilton Products uses the 200%-declining-balance method and the half-year convention. Depreciation expense in 2009 and 2010 will be: A. $11,000 in 2009 and $19,250 in 2010. B. $22,000 in 2009 and $12,571 in 2010. C. $22,000 in 2009 and $7,857 in 2010. D. $11,000 in 2009 and $22,000 in 2010.

11000 in 2009 and 19250 in 2010

Clark Imports sold a depreciable plant asset for cash of $35,000. The accumulated depreciation amounted to $70,000, and a loss of $5,000 was recognized on the sale. Under these circumstances, the original cost of the asset must have been: A. $65,000. B. $75,000. C. $100,000. D. $110,000

110000

Harvard Company purchased equipment having an invoice price of $11,500. The terms of sale were 2/10, n/30, and Harvard paid within the discount period. In addition, Harvard paid a $160 delivery charge, $185 installation charge, and $931 sales tax. The amount recorded as the cost of this equipment is: A. $11,845. B. $12,776. C. $11,615. D. $12,546.

12,546

Early in the current year, Tokay Co. purchased the Silverton Mine at a cost of $20,000,000. The mine was estimated to contain 200,000 tons of ore and to have a residual value of $5,000,000 after mining operations are completed. During the year, 105,000 tons of ore were removed from the mine. At year-end, the book value of the mine (cost minus accumulated depletion) is: A. $15,000,000. B. $12,125,000. C. $7,875,000. D. Less than $10,000,000.

12125000

Assume Lloyd uses 200%-declining-balance depreciation with the half-year convention. Depreciation expense to be recognized in 2010 (the second year of ownership) is: A. $8,400. B. $13,120. C. $15,120. D. Some other amount.

15120

Refer to the information above. Assume that in its financial statements, Victor uses straight-line depreciation and the half-year convention. Depreciation recognized on this equipment in 2009 and 2010 will be: A. $40,000 in 2009 and $30,000 in 2010. B. $23,333 in 2009 and $30,000 in 2010. C. $17,500 in 2009 and $35,000 in 2010. D. $20,000 in 2009 and $35,000 in 2010

17500 in 2009 and 35000 in 2010

Sayville Dairy sold a delivery truck for cash of $8,680. The original cost of the truck was $33,600, and a loss of $5,320 was recognized on the sale. The accumulated depreciation at the date of sale must have been: A. $24,920. B. $14,560. C. $3,360. D. $19,600

19600

The legal life of most patents is: A. 5 years. B. 20 years. C. 40 years. D. 50 years.

20 years

Lewis Imports sold a depreciable plant asset for cash of $135,000. The accumulated depreciation amounted to $170,000, and a loss of $15,000 was recognized on the sale. Under these circumstances, the original cost of the asset must have been: A. $120,000. B. $155,000. C. $185,000. D. $320,000.

320000

Land and a warehouse were acquired for $890,000. What amounts should be recorded in the accounting records for land and for the warehouse if an appraisal showed the estimated values to be $400,000 for the land and $700,000 for the warehouse? A. $400,000 for land; $490,000 for warehouse. B. $323,960 for land; $566,040 for warehouse. C. $400,000 for land; $700,000 for warehouse. D. $190,000 for land; $700,000 for warehouse

323,960 for land 566,040 for warehouse

Ladd Company sold a plant asset that originally had cost $50,000 for $22,000 cash. If Ladd correctly reports a $5,000 gain on this sale, the accumulated depreciation on the asset at the date of sale must have been: A. $33,000. B. $28,000. C. $23,000. D. Some other amount.

33000

Suffolk Associates sold office furniture for cash of $42,000. The accumulated depreciation at the date of sale amounted to $38,000, and a gain of $18,000 was recognized on the sale. The original cost of the asset must have been: A. $31,000. B. $62,000. C. $84,000. D. $59,000.

62000

The inclusion of the intangible asset goodwill in the financial statements of a company indicates: A. That the company has a favorable reputation with its customers. B. A monopoly position in the industry or superior management. C. An unbroken record of annual earnings and dividends. D. That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets.

That the company has purchases a going business as a price in excess of the fiar market value of the net identifable assets

An asset which costs $28,800 and has accumulated depreciation of $6,000 is sold for $21,600. What amount of gain or loss will be recognized when the asset is sold? A. A gain of $1,200. B. A loss of $1,200. C. A loss of $7,200. D. A gain of $7,200.

a loss of 1200

An asset which costs $14,400 and has accumulated depreciation of $8,000 is sold for $5,600. What amount of gain or loss will be recognized when the asset is sold? A. A gain of $800. B. A loss of $800. C. A loss of $2,400. D. A gain of $2,400.

a loss of 800

The cost of a new windshield wiper on a delivery vehicle would be classified as A capital expenditure a revenue expenditure part of the cost of goods sold an unusual and infrequent expense

a revenue expenditure

Coca-cola famous name printed in distinctive typeface is an example of a trademark a patent a copyright goodwill

a trademark

All of the following may be considered intangible assets except: Account receivables copyrights franchises goodwill

accounts receivables

An accelerated depreciation method results in reporting higher earnings every year depreciates an asset over a shorter life than does the straight-line method recognizes more depreciation expense in the early years of an asset's useful life and the later years is required for assets that become technologically obsolete before they physically wear out

recognizes more depreication expense in the early years of an asset's useful life the late years

In February 2009, Brilliant Industries purchased the Topaz Mine at a cost of $10,000,000. The mine is estimated to contain 500,000 carats of stone and to have a residual value of $500,000 after mining operations are completed. During 2009, 50,000 carats of stone were removed from the mine and sold. In this situation: A. The book value of the mine is $9,000,000 at the end of 2009. B. The amount of depletion deducted from revenue during 2009 is $950,000. C. The amount of depletion deducted from revenue during 2009 is $1,000,000. D. The mine is classified as an intangible asset and amortized over a period not to exceed 40 years.

the amount of depletion deducted from revenue during 2009 is 950000

The gain on the disposal of equipment is recognized when: A. The book value of the equipment is greater than the value received. B. The book value of the equipment is less than the value received. C. A salvage value exists. D. A gain should not be recognized on the disposal of an asset.

the book value of the equipment is less than the value received

The term accumulated depreciation, as used in accounting, is best defined as: A. The portion of a plant asset recognized as expense since the asset was acquired. B. Funds (or cash) set aside to replace the asset being depreciated. C. Earnings retained in the business that will be used to purchase another asset when the present asset is depreciated. D. An expense of doing business.

the portion of a plant asset recognized as expense since the asset was acquired

The book value of an asset in the plant and equipment category is: A. The undepreciated cost of the asset. B. The current replacement cost of the asset. C. The original cost of the asset. D. The accumulated depreciation on the asset to date.

the undepreciated cost of the asset

Assume Lloyd uses 150%-declining-balance depreciation with the half-year convention. Depreciation expense to be recognized in 2009 (the year of purchase) is: A. $8,400. B. $6,300. C. $12,600. D. Some other amount.

6300

Refer to the information above. Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2009 and 2010 will be: A. $2,333 in 2009 and $7,000 in 2010. B. $5,833 in 2009 and $10,000 in 2010. C. $6,667 in 2009 and $10,000 in 2010. D. $10,000 in 2009 and $10,000 in 2010

6667 in 200- and 10000 in 2010

If the 150% declining balance method is being used and an asset has a useful life of 20 years what is the depreciation rate? A. 7.5%. B. 10%. C. 15%. D. Some other amount.

7.5%

when a company sells bonds between interest dates they will pay which of the following at the first interest payment date

an amount equal to the stated interest

which of the following situations is impossible book value is greater than residual value book value is equal to the residual value book value is less than residual value book value is less than the original cost

book value is less than residual value

all of the following assets are amortized except patents franchises copyfrights natural resources

natural resources

Evergreen Mfg. is a rapidly growing company that acquires more equipment every year. Evergreen uses straight-line depreciation in its financial statements and MACRS in its tax returns. Identify all correct statements: A. Using straight-line depreciation in the financial statements instead of an accelerated method increases Evergreen's reported net income. B. Using straight-line depreciation in the financial statements instead of an accelerated method increases Evergreen's annual net cash flow. C. Using an accelerated method instead of straight-line in income tax returns increases Evergreen's net cash flow. D. As long as Evergreen keeps growing, it will report more depreciation in its income tax returns each year than it does in its financial statements.

using an accelerated mehtod instead of straight line in income tax returns increase evergreen's cash flow

Yale Company purchased equipment having an invoice price of $21,500. The terms of sale were 2/10, n/30, and Yale paid within the discount period. In addition, Yale paid a $320 delivery charge, $350 installation charge, and $1,183 sales tax. The amount recorded as the cost of this equipment is: A. $21,070. B. $21,500. C. $21,740. D. $22,923

22923

Early in the current year, Amazon Co. purchased the Rio Silver Mine at a cost of $30,000,000. The mine was estimated to contain 400,000 tons of ore and to have a residual value of $7,500,000 after mining operations are completed. During the year, 115,000 tons of ore were removed from the mine. At year-end, the book value of the mine is: A. $22,500,000. B. $6,468,750. C. $23,531,250. D. $30,000,000.

23531250

In its financial statements, Shoreham uses double-declining-balance depreciation with half-year convention. The book value of the equipment at December 31, 2009, will be: A. $20,267. B. $12,667. C. $25,333. D. Some other amount.

253331

Glouchester Associates sold office equipment for cash of $142,000. The accumulated depreciation at date of sale amounted to $138,000, and a gain of $18,000 was recognized on the sale. The original cost of the asset must have been: A. $260,000. B. $262,000. C. $280,000. D. $156,000.

262000

On April 2, 2009, Victor, Inc. acquired a new piece of filtering equipment. The cost of the equipment was $160,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 4 years. Refer to the information above. Assume that in its financial statements, Victor uses straight-line depreciation and rounds depreciation for fractional years to the nearest whole month. Depreciation recognized on this equipment in 2009 and 2010 will be: A. $23,333 in 2009 and $35,000 in 2010. B. $40,000 in 2009 and $30,000 in 2010. C. $20,000 in 2009 and $35,000 in 2010. D. $26,250 in 2009 and $35,000 in 2010.

26250 in 2009 and 35000 in 2010

Land is purchased for $256,000. Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence, and a legal fee of $8,500. What is the cost of the land? A. $256,000. B. $281,000. C. $284,600. D. $282,200.

282,200

In its financial statements, Shoreham uses straight-line depreciation with the half-year convention. The book value of the equipment at December 31, 2009, will be: A. $26,600. B. $42,000. C. $34,800. D. Some other amount.

34800

On May 5, 2009, Lloyd purchased a machine for $84,000. The estimated life of the machine was 10 years, with an estimated residual value of $10,000. The service life in terms of "output" is estimated at 8,000 hours of operation. 140. Assume Lloyd uses straight-line depreciation with the half-year convention. Depreciation expense to be recognized in 2009 (the year of purchase) is: A. $7,400. B. $8,400. C. $3,700. D. Some other amount.

3700

On March 2, 2009, Glen Industries purchased a fleet of automobiles at a cost of $550,000. The cars are to be depreciated by the straight-line method over five years with no salvage value. Glen uses the half-year convention to compute depreciation for fractional periods. The book value of the fleet of automobiles at December 31, 2010, will be: A. $165,000. B. $400,000. C. $495,000. D. $385,000.

385000

Cranston Instrumentation sold a depreciable asset for cash of $150,000. The original cost of the asset was $600,000. Cranston recognized a gain of $22,500 on the sale. What was the amount of accumulated depreciation on the asset at the time of its sale? A. $472,500. B. $127,500. C. $577,500. D. $495,000.

472500

On April 30, 2009, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. 89. Refer to the information above. Assume that in its financial statements, Tilton Products uses straight-line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2009 and 2010 will be: A. $7,500 in 2009 and $11,000 in 2010. B. $6,000 in 2009 and $12,000 in 2010. C. $5,000 in 2009 and $10,000 in 2010. D. $5,500 in 2009 and $11,000 in 2010.

5000 in 2009 and 10000 in 2010

Land is purchased for $456,000. Additional costs include a $30,300 fee to a broker, a survey fee of $3,400, $2,750 to construct a fence, and a legal fee of $12,500. What is the cost of the land? A. $456,000. B. $486,300. C. $502,200. D. $504,950.

502200

Assume Lloyd uses the units-of-output method and that the machine was in operation for 1,000 hours in 2009 and 1,800 hours in 2010. The book value of the machine at December 31, 2010 is: A. $48,100. B. $58,100. C. $25,900. D. Some other amount.

58100

On April 8, 2009, Jupitor Corp. acquired equipment at a cost of $480,000. The equipment is to be depreciated by the straight-line method over six years with no provision for salvage value. Depreciation for fractional years is computed by rounding the ownership period to the nearest month. Depreciation expense recognized in 2009 will be: A. $53,333. B. $66,667. C. $60,000. D. $80,000.

60000

Machinery acquired new on January 1 at a cost of $80,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. On January 1, following six full years of use of the machinery, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after three years, that is, at the end of the ninth year of service. Under this revised estimate, the depreciation expense for the seventh year of use would be: A. $8,000. B. $10,000. C. $13,000. D. $24,000.

8000

Refer to the information above. Assume that in its financial statements, Tilton Products uses the 150%-declining-balance method and the half-year convention. Depreciation expense in 2009 and 2010 will be: A. $8,250 in 2009 and $14,953 in 2010. B. $16,500 in 2009 and $12,964 in 2010. C. $16,500 in 2009 and $16,500 in 2010. D. $15,000 in 2009 and $11,786 in 2010.

8250 n 2009 and 14953 in 2010

Mayer Instrumentation sold a depreciable asset for cash of $300,000. The original cost of the asset was $1,200,000. Mayer recognized a gain of $45,000 on the sale. What was the amount of accumulated depreciation on the asset at the time of its sale? A. $945,000. B. $255,000. C. $1,155,000. D. $990,000.

945000

Refer to the information above. In the year 2015, Tilton Products sells this machinery for $4,500. At the date of sale, the machinery had been depreciated by Tilton Products to its estimated residual value of $8,000. This sale results in: A. A $3,500 loss in both the company's financial statements and income tax return. B. No gain or loss in either the financial statements or income tax return. C. A $3,500 loss in the financial statements, a $3,500 gain in the income tax return. D. A $3,500 loss in the financial statements, but no gain or loss in the income tax return

a 3500 loss in both the company s financial statement and income tax return

Which of the following statements is (are) correct? A. Accumulated depreciation represents a fund being accumulated for the replacement of plant assets. B. The cost of a machine includes the cost of repairing damage to the machine during the installation process. C. A company may use different depreciation methods in its financial statements and its income tax return. D. The use of an accelerated depreciation method causes an asset to wear out more quickly than does use of the straight-line method.

a company may use different depreciation method in its financial statements and in its income tax return

With respect to depreciation policies, the principle of consistency means: A. A company should use the same depreciation methods in its financial statements that it uses in its income tax returns. B. A company should use the same depreciation methods as other companies in the same industry. C. A company should use the same depreciation method from year to year for a given plant asset. D. A company should use the same depreciation method in computing depreciation expense on all its assets.

a company should use the same depreciation method from year to year for a given plant asset

In the fixed percentage of the declining balance depreciation method, the book value of the asset is multiplied by an increasing depreciation rate a constant depreciation rate a decreasing depreciation rate a rate that changes each year but is determine from a table

a constant depreciation rate

When a depreciable asset is sold at a price equal to its book value, a journal entry would include: a credit to the asset account for its book value a debit to accumulated depreciation a credit to accumulated depreciation a credit to cash

a debit to accumulated depreciation

The entry to record amortization on a copyright would include a debit to amortization expense a debit to accumulated amortization a debit to copyright a credit to amortization expense

a debit to amortization expense

An asset which costs $97,600 and has accumulated depreciation of $82,000 is sold for $18,000. What amount of gain or loss will be recognized when the asset is sold? A. A gain of $15,600. B. A loss of $15,600. C. A loss of $2,400. D. A gain of $2,400.

a gain of 2400

U.S. GAAP requires that convertible bonds be classified on the balance sheet as

a liability

An asset which costs $18,800 and has accumulated depreciation of $6,000 is sold for $11,600. What amount of gain or loss will be recognized when the asset is sold? A. A gain of $1,200. B. A loss of $1,200. C. A loss of $7,200. D. A gain of $7,200.

a loss of $1200

Which of the following is not a capital expenditure? A. Advertising expenditures to introduce a new product line. B. Sales tax paid in conjunction with the purchase of new machinery. C. Installation of elevators to replace escalators. D. An amount paid to acquire a patent with a remaining life of only three years.

advertising expenditures to introduce a new product line

When a company uses straight-line depreciation and the half-year convention, assets with a five-year life: A. Will have the same depreciation expense in the first and last years. B. Will be depreciated over six accounting years. C. Book value will equal its salvage value at the end of its economic life. D. All of the above statements are correct.

all of the above statements are correct

Which of the following would not be considered part of the cost of equipment recently purchased? sales tax transportation charges installation and setup charges all three care capitalized costs

all three are capitalized costs

Capital expenditures are recorded as an expense an asset a liability income

an asset

revenue expenditures are recorded as an expense an asset a liability income

an expense

Off balance sheet financing may involve either

an operating lease, a special purpose entity

Cage Corporation purchases Presley Company's entire business for $2,700,000. The fair market value of Presley's net identifiable assets is $2,400,000. A. Presley should record goodwill of $300,000. B. Cage paid $300,000 for goodwill generated by Presley. C. Cage should charge the $300,000 excess paid for Presley Company directly to expense. D. Presley should record amortization over a period not to exceed 40 years

cage paid 300000 for goodwill generated by presleydep

Responsibility for selection of the depreciation methods used in financial reporting rests with: A. Company management. B. The FASB. C. The IRS. D. The CPA firm that audits the company's financial statements.

company managements

In which of the following situations should the named company not record any depreciation expense on the asset described? A. Commuter Airline is required by law to maintain its aircraft in "as good as new" condition. B. Metro Advertising owns an office building that has been increasing in value each year since it was purchased. C. Computer Sales Company has in inventory a new type of computer designed "never to become obsolete." D. None of the above answers is correct―in each case, the named company should record depreciation on the asset described.

computer sales company has in inventroy a new type of computer designed 'never to become obsolete

The book value of plant assets (other than land): A. Increases with the passage of time. B. Decreases with the passage of time. C. Remains the same with the passage of time. D. May increase or decrease depending upon the economy.

decrease with the passage of time

Which of the following should not be treated as a revenue expenditure? A. Delivery costs on newly purchased equipment. B. Annual fire insurance premiums on plant and equipment. C. Repair to an elevator of a five year old building. D. The purchase of a pencil sharpener for $10 used in an office.

delivery costs on newly purchased equipment

The gain or loss on the disposal of a depreciable asset reported in financial statements often differs from that reported for income tax purposes. The principal reason for the difference is: A. The cost of the asset is different for financial reporting and income tax purposes. B. The sales price of the asset is different for financial reporting and income tax purposes. C. Different depreciation methods have been used in financial statements and in income tax returns. D. The company has made an error because the same amount of gain or loss should appear in the income tax return as in the financial statements.

different depreciation methods have been used in financial statements and in income returns

For depreciable property other than real estate, MACRS is based upon: A. Either the 150% or 200% declining-balance method. B. The straight-line method. C. A 10-year recovery period. D. The depreciation method and recovery period used by the company in its financial statements.

either 150% or 200% declining balance method

Total stockholders' equity of Tucker Company is $4,000,000. The fair market value of Tucker's net identifiable assets (assets less liabilities) is $5,000,000. Empire Corporation makes an offer to purchase Tucker's entire business for $5,800,000. In this situation: A. Tucker Company should report goodwill of $800,000 in its balance sheet. B. Tucker Company should report goodwill of $1,800,000 in its balance sheet. C. Empire Corporation is willing to pay $1,800,000 for goodwill generated by Tucker, and Empire will report this goodwill in its balance sheet if the purchase is finalized. D. Empire Corporation is willing to pay $800,000 for goodwill generated by Tucker, and Empire will report this goodwill in its balance sheet if the purchase is finalized.

empire corporation is willing to pay 800000 for goodwill generated by Tucker, will port this goodwill in its balance sheet if the purchase if finalized

The FICA tax paid by an employer is

equal to the amount paid by the employee

Employers are required to pay all of the following on wages paid to each employee except

health insurance benefits

Which of the following statements about MACRS is not correct? A. MACRS is the only accelerated depreciation method that may be used on newly acquired assets for federal income tax purposes. B. The method permits "depreciating" the asset to a tax basis of $0 over a specified recovery period. C. If a company uses MACRS in its income tax returns, it also must use MACRS in its financial statements. D. Most businesses would benefit from using MACRS rather than straight-line depreciation in their income tax returns.

if a company uses MACRS in its income tax returns, it also must use MACRS in the financial statements

Accelerated depreciation methods are used primarily in income tax returns the financial statement of small business the financial statements of publicly owned corporations companies with computer-based accounting systems

income tax returns

For the financial statements of publicly traded companies, MACRS: A. Is recommended. B. Is required. C. Is optional. D. Is not considered to be in conformity with GAAP.

is not considered to be in conformity of GAAP

Intangible assets are assets used in business operations but which: A. Lack physical substance. B. Cannot be sold. C. Have been depreciated below their estimated salvage values. D. Cannot be specifically identified.

lack physical substance

Which of the following assets is not subject to depreciation and whose usefulness does not decline over time? A. Patents. B. Copyrights. C. Land. D. Coal mine.

land

In which of the following situations would Martinez Industries include goodwill in its balance sheet? A. The fair market value of Martinez's net identifiable assets amounts to $2,000,000. Normal earnings for this industry is 15 percent of net identifiable assets. Martinez's net income for the past five years has averaged $390,000. B. Martinez spent $800,000 during the current year for research and development for a new product which promises to generate substantial revenue for at least 10 years. C. Martinez acquired Baxter Electronics at a price in excess of the fair market value of Baxter's net identifiable assets. D. A buyer wishing to purchase Martinez's entire operation has offered a price in excess of the fair market value of Martinez's net identifiable assets

martinez acquired bater dlectronics at a price in excess of the fair market value baxter's net identififiable assets

The application of the matching principle to depreciation of plant and equipment can best be described as: A. The matching of the book value of an asset with its market value. B. Offsetting the revenue of an accounting period with the estimated decline in value of plant and equipment during the accounting period. C. Offsetting revenue of an accounting period with the portion of the cost of plant and equipment estimated to have been used up during the accounting period. D. The matching of the depreciation expense reported in the income statement for an accounting period with the accumulated depreciation reported in the balance sheet

offsetting revenue of an accounting period with the portion of the cost of planning equipment estimated to have been used up during the accounting period

The adjusting entries to record depreciation or amortization expense or to write down assets that have become impaired: A. Reduce both net income and cash balances. B. Reduce net income, but have no direct effect on cash balances. C. Decrease cash balances, but have no direct effect upon net income. D. Affect neither net income nor cash balances.

reduce net income, but have no direct effect on cash balances

Armstrong Company recently acquired a new computer system. Which of the following costs associated with the computer should not be debited to the Equipment account? A. Insurance coverage purchased by Armstrong to cover the computer during shipment from the manufacturer. B. Wages paid to system programmers hired to prepare the new computer for use. C. Replacement of several circuit boards damaged during installation. D. Installation of new electrical power supplies required for the computer

replacement of several circuit boards damaged during installation

The basic purpose of the matching principle is to allocate the cost of an asset to expense over the years in which the asset contributes to revenue. Current accounting practice does not strictly apply this principle to expenditures for: A. Natural resources. B. Research and development. C. Trademarks. D. Equipment.

research and development

For financial reporting purposes, the gain or loss on the sale of a plant asset is determined by comparing the asset's: A. Cost with its book value. B. Sales price with its book value. C. Tax basis with its book value. D. Sales price with its tax basis.

sales price with its book value

Which of the following is a capital expenditure? sales tax paid to conjunctive with the purchase of office equipment monthly rent of a delivery truck research and development costs small expenditures to acquire long-lived assets, such as $13 to purchase a wastebasket

sales tax paid in conjunction with the purchase of office equipment

Expenditures for research and development intended to lead to new products of commercial value: A. Should be recorded as intangible assets and amortized during the years in which benefits are expected. B. Should be charged to expense when incurred. C. Should be capitalized only if patents are expected to be granted. D. Should be classified as deferred charges.

should be charged to expense when incurred

On April 1, 2010, Sanders Construction paid $10,000 for equipment with an estimated useful life of 10 years and a residual value of $2,000. The company uses the double-declining-balance method of depreciation and applies the half-year convention to fractional periods. In 2011, the amount of depreciation expense to be recognized on this equipment is: A. $1,600. B. $1,400. C. $1,280. D. Some other amount.

some other amount

In February 2012, Gemstone Industries purchased the Opal Mine at a cost of $20,000,000. The mine is estimated to contain 500,000 carats of stone and to have a residual value of $1,000,000 after mining operations are completed. During 2012, 50,000 carats of stone were removed from the mine and sold. In this situation: A. The book value of the mine is $19,000,000 at the end of 2012. B. The amount of depletion deducted from revenue during 2012 is $1,900,000. C. The amount of depletion deducted from revenue during 2012 is $1,000,000. D. The mine is classified as an intangible asset and amortized over a period not to exceed 40 years.

the amount of depletion deducted from revenue during 2012 is 1900000

When comparing the units-of-output method of depreciation with straight-line depreciation: A. The depreciation expense in the first year will always be greater under units-of-output method. B. The depreciation expense in the first year will always be less under the units-of-output method. C. The depreciation expense in the first year will always be the same. D. The depreciation expense in the first year may be greater than, equal to, or less under the units-of-output method.

the depreciation expense in the first year may be greater than, equal to or lessunder the units of output method

the amount of the present value of a future cash receipt will dpeend upon

the length of time until money is received, the amount receieved and rate of return

in preparing an amortization table, it is necessary to include

the original amount of the liability, the amount of periodic payments and the interest rate.

Tomassi Company paid $450,000 to acquire a piece of real estate consisting of land and an office building with a parking lot. In this situation: A. The purchase price should be apportioned among the Land, Land Improvement, and Building accounts. B. The entire purchase price should be debited to the Plant and Equipment account. C. Land, Land Improvement, and Building accounts should each be debited for the respective appraisal value of each item. D. Allocation of the entire $450,000 to Land results in an understatement of net income in the current and future accounting periods.

the purchase price should be apportioned amoung the Land, land improvement, and building accounts