Chapter 9 Quiz- Principals of Financial Accounting

An asset with a book value of $4,725 was discarded, having no market value. How much will be recorded as a loss or gain on disposal? a. Loss of $4,725 b. Gain of $4,725 c. No loss or gain d. Cannot be determined.

A

Coal Miner Co. acquired coal rights for $100,000,000. It is estimated that there are 2,500,000 tons of the resource; during the current year, 500,000 tons were mined and sold. What is the amount of depletion for the current year? a. $20,000,000 b. $2,000,000 c. $2,500,000 d. $10,000,000

A

Intangible assets are reported on the balance sheet a. immediately after the current assets. b. immediately after the property, plant, and equipment. c. before property, plant, and equipment. d. before the current assets.

A

The best definition of a patent is a. the exclusive right to produce and sell goods with one or more unique features. b. a name, term, or symbol used to identify a business or its product. c. an asset created from favorable factors such as location, product quality, reputation, and managerial skills. d. the exclusive right to publish and sell literary, artistic, or musical compositions.

A

The estimated value of an asset at the end of its useful life is called all of the following except a. book value. b. salvage value. c. scrap value. d. residual value.

A

he calculation of depletion expense is a. Depletion Rate × Quantity Extracted. b. Quantity Extracted × Estimated Useful Life. c. Depletion Rate × Estimated Useful Life. d. None of these choices are correct.

A

All except which of the following will be included in the cost of a fixed asset? a. Direct costs of new construction b. Mistakes in installation c. Cost of installing equipment d. Freight costs

B

All of the following assets will be included as intangible assets on the balance sheet except a. patents. b. buildings. c. goodwill. d. copyrights.

B

All of the following will be found under the caption of "property, plant, and equipment" in the balance sheet except a. land improvements. b. trademark. c. parking lot costs. d. computer equipment.

B

Cardinal Industries purchased a generator that cost $11,000. It has an estimated life of five years and a residual value of $1,000. It is estimated that it will be good for 5,000 hours. Compute the depreciation expense for the first full year using the straight-line method of depreciation. a. 2,200 b. $1,000 c. $2,000 d. $10,000

B

In regard to discarding fixed assets, which of the following is not true? a. If a fixed asset is no longer used and has no residual value, it is discarded. b. Full depreciation should be recorded and no loss recognized with an asset that is discarded rather than sold. c. If a fixed asset is no longer used and has no residual value, it should be written off. d. Recorded depreciation should be brought up to date before removing the asset from the accounting records.

B

The best definition of a trademark is a. the exclusive right to produce and sell goods with one or more unique features. b. a name, term, or symbol used to identify a business or its product. c. an asset created from favorable factors such as location, product quality, reputation, and managerial skills. d. the exclusive right to publish and sell literary, artistic, or musical compositions.

B

Which of the following will be classified as a fixed asset for a movie theater? a. The latest movie b. A popcorn machine c. Trademark d. Land for sale

B

The depletion rate is calculated as a. Estimated Useful Life of Resource/Cost of Resource. b. Cost of Resource/Estimated Useful Life of Resource. c. Cost of Resource/Estimated Total Units of Resource. d. Estimated Total Units of Resource/Cost of Resource.

C

Which of the following is not one of the most common depreciation methods? a. Straight-line method b. Units-of-activity method c. Sum-of-the-years-digits method d. Double-declining-balance method

C

All of the following are factors used in determining depreciation expense with the straight-line method except a. the asset's estimated residual value. b. the asset's expected useful life. c. the asset's initial cost. d. None of these choices are correct.

D

Equipment was purchased at a cost of $78,000. The equipment had an estimated useful life of five years and a residual value of $3,000. Assuming the equipment was sold at the end of Year 4 for $8,000, determine the gain or loss on the sale of equipment. (Assume the straight-line depreciation method.) a. A gain of $8,000 b. A loss of $8,000 c. A gain of $10,000 d. A loss of $10,000

D

If an asset is long-lived and is used in a productive manner in a business, it will be classified as a(n) a. expense. b. investment. c. intangible asset. d. fixed asset.

D

The best definition of a copyright is a. the exclusive right to produce and sell goods with one or more unique features. b. a name, term, or symbol used to identify a business or its product. c. an asset created from favorable factors such as location, product quality, reputation, and managerial skills. d. the exclusive right to publish and sell literary, artistic, or musical compositions.

D

The expensing of a natural resource is called a. replenishing. b. depletion. c. amortization. d. depreciation.

D

Which of the following is not true in regard to selling fixed assets? a. If the selling price is more than the book value, a gain is recorded. b. The cash receipt is recorded. c. The journal entry is similar to discarding fixed assets. d. Accumulated Depreciation will be credited.

D