Accounting 1 Exam 4

Treated as an expense when incurred

Research and development costs are:

Impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period

Capitalizing an expenditure rather than recording it as a revenue expenditure:

Business is purchased and payment is made in excess of the value of the net assets

Goodwill can be recorded as an asset when a(n):

Intangible assets

Operating assets with no physical properties are called:

Their legal lives or useful lives, whichever is shorter

The accounting life of intangible assets is determined by:

$572,000

What is the cost of the land?

1.77

A company has total assets of $350,000 consisting of current assets of $115,000, property, plant, and equipment of $200,000, and other assets of $35,000. The company has total liabilities of $100,000 consisting of current liabilities of $65,000 and other liabilities of $35,000. What is the current ratio?

Best allocates the original cost of the asset to the periods benefited by the use of the asset

A company should choose a depreciation method that:

The cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset

Depreciation is a process by which:

An effort to achieve proper matching of the cost of operating assets with related revenues

Depreciation is:

Interest payable by $1,200

On May 1, a company borrowed $30,000 from the First National Bank on a 1-year, 6% note. Assuming the company keeps its records on a calendar year basis, an entry is needed on December 31st to increase:

Double-declining-balance

Refer to Fabian Woodworks. Based on the information presented above, what methods of depreciation will maximize depreciation expense in 2012?

Decrease in both liabilities and assets

The payment of Accounts Payable results in a(n):

Liabilities increase and stockholder's equity decreases

What is the impact on the accounting equation of recording the accrual of interest expense?

3.50

GTO Division has $14,000 in current assets, $2,000 in accounts payable, and $2,000 in unearned sales revenue. What is the division's current ratio?

Expensed in the period incurred

Generally accepted accounting principles (GAAP) require that research and development costs to develop a new product be

Interest payable by $1,050

On October 1st, a company borrowed $60,000 from Eighth National Bank on a 1-year, 7% note. If the company's fiscal year ends on December 31st, a year-end adjusting entry is required to increase:

$6,000

Refer to Fabian Woodworks. If the company uses the straight-line method of depreciation, what is the book value at December 31, 2014?

$10,000

Refer to Fabian Woodworks. What amount will be reported as depreciation expense over the 5-year life of the equipment?

4.0 years

Refer to Fireworks City. Using the data for 2012, determine the average life of the company's property, plant, and equipment rounded to one decimal place.

Increase wages expense by $8,000

Refer to Gainesville Truck Center. Assuming December 31st falls on a Thursday, the year-end adjusting entry would:

All of the accounts are needed to record a company's payroll

Refer to Gainesville Truck Center. Which of the following expense accounts will be recorded as a result of this payroll transaction?

Social security tax expense will be debited in the amount of $620

Refer to Gainesville Truck Center. Which of the following statements is true regarding the FICA taxes that must be recorded?

The estimated life of the asset, its acquisition cost, and its estimated residual value

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?