Filters
Question type
Study Flashcards

On January 1,2018,Xit Company bought a new delivery truck for $30,000.Xit plans to use the truck for 4 years,during which it will be driven 50,000 miles.The truck will be worthless at the end of the 4 years.If the truck was driven 15,000 miles in 2018,Depreciation Expense using units-of-production is:


A) $9,000.
B) $3,750.
C) $7,500.
D) $15,000.

E) C) and D)
F) None of the above

Correct Answer

verifed

verified

Long-lived assets found on a company's balance sheet may include some assets that have no physical substance.

A) True
B) False

Correct Answer

verifed

verified

At the end of the first year of an asset's life,the declining-balance depreciation:


A) causes an asset to be carried at a higher book value than that computed using the straight-line method.
B) causes an asset to be carried at a lower book value than that computed using the straight-line method.
C) causes an asset to be carried at the same book value as that computed using the straight-line method.
D) cannot be used if the resulting book value will be significantly different from that which would result from using the straight-line method.

E) B) and D)
F) C) and D)

Correct Answer

verifed

verified

On January 1,2018,Superior Mining Co.paid $750,000 for a mineral deposit in Superior,Arizona,and then spent $112,500 to develop the deposit for exploitation.It was estimated that 690,000 total cubic yards could be extracted economically.During 2018,69,000 cubic yards of minerals were extracted;the minerals have not yet been sold. Required: Part a.Compute the amount of depletion expense for 2018. Part b.Prepare the journal entry to record the 2018 depletion.

Correct Answer

verifed

verified

Part a
Depletion expense = Cost × (Actua...

View Answer

On January 1,2018,Dunbar Echo Co.sells a machine for $46,000.The machine was originally purchased on January 1,2016 for $80,000.The machine was estimated to have a useful life of 5 years and a residual value of $0.Dunbar Echo uses straight-line depreciation.In recording this transaction:


A) a loss of $2,000 would be recorded.
B) a gain of $2,000 would be recorded.
C) a loss of $34,000 would be recorded.
D) a gain of $46,000 would be recorded.

E) A) and C)
F) None of the above

Correct Answer

verifed

verified

The useful life of an asset is always measured in units of time,such as years or months.

A) True
B) False

Correct Answer

verifed

verified

A company paid $500,000 to purchase equipment and $15,000 to have the equipment delivered to and installed in the company's production facilities.The equipment is expected to be used a total of 28,000 hours throughout its estimated useful life of six years.The estimated residual value of the equipment is $5,000.The company began using the equipment on May 1,2018.The company has an October 31,2018 year-end.It used the equipment for a total of 11,200 hours between May 1 and October 31,2018.Using the units-of-production method,what amount of depreciation expense would the company report in the income statement prepared for the year-ended October 31,2018?


A) $102,000
B) $198,000
C) $204,000
D) $206,000

E) C) and D)
F) A) and D)

Correct Answer

verifed

verified

Assume that,prior to preparing adjusting entries at the end of the year,Caterpillar Corporation has a fixed asset turnover ratio of 3.4 based on average net fixed assets of $500,000,000.Which of the following year-end adjustments would cause Caterpillar's fixed asset turnover ratio to increase?


A) Caterpillar accrues and capitalizes $50,000 for self-constructed assets.
B) Caterpillar accrues a liability for ordinary repair costs in the amount of $50,000.
C) Caterpillar writes down an impaired piece of equipment by $50,000.
D) Caterpillar increases the sales returns & allowances by $50,000.

E) B) and D)
F) None of the above

Correct Answer

verifed

verified

Marshall Company purchases a machine for $800,000.The machine has an estimated residual value of $40,000.The company expects the machine to produce two million units.The machine is used to make 400,000 units during the current period. If the units-of-production method is used,the depreciation rate is:


A) $1.90 per unit.
B) $0.38 per unit.
C) $0.10 per unit.
D) $2.00 per unit.

E) None of the above
F) A) and D)

Correct Answer

verifed

verified

Buckeye Industries purchased a truck and trailer for $81,000.The appraised values of the truck and trailer are $57,000 and $28,500,respectively.What is the amount of the cost that should be assigned to the trailer?


A) $28,500
B) $27,000
C) $24,000
D) $40,500

E) C) and D)
F) B) and D)

Correct Answer

verifed

verified

Match each term with the appropriate definition.Not all definitions will be used. -Amortization


A) Net sales revenue divided by average net fixed assets.
B) Costs that are expensed in the period incurred.
C) A contractual agreement that allows limited permission for use of a property.
D) Net income divided by average total assets.
E) An estimate of how long a tangible asset will last before it physically wears out.
F) Asset cost minus residual value.
G) Costs that are recorded as revenues.
H) An estimate of how long a company will use a particular asset.
I) Allocating the cost of tangible assets over their limited useful life.
J) A cumulative record of depreciation expense,accumulated depreciation and book value.
K) Asset cost minus accumulated depreciation.
L) Grants the exclusive right to sell or use a creative work.
M) The method whereby different parts of an asset may be depreciated over different useful lives under IFRS.
N) The principle that companies wish to pay the lowest possible tax at the last possible time.
O) Allocating the cost of intangible assets over their limited useful life.

P) F) and O)
Q) B) and K)

Correct Answer

verifed

verified

The "least and latest rule" is:


A) that a taxpayer should pay the least tax legally permitted at the latest date allowed.
B) an inventory management system similar to LIFO,where the least amount of inventory on hand is from the latest purchases from suppliers.
C) the latest information technology is the least commonly used in accounting practice.
D) the least competent employees are always the latest to show up for work.

E) None of the above
F) A) and B)

Correct Answer

verifed

verified

A company would most likely choose the double-declining balance depreciation method for which of the following long-lived tangible assets?


A) Vehicles
B) Office buildings
C) Warehouses
D) Land improvements

E) None of the above
F) C) and D)

Correct Answer

verifed

verified

The proper accounting for natural resources is to record the original cost as an:


A) asset,then later transfer amounts to Inventory as the resource is depleted,and finally expense the cost as the resources are sold.
B) asset,then expense the cost over its useful life.
C) expense in the period purchased.
D) asset,and then expense the cost over its useful life using straight-line depreciation.

E) A) and D)
F) A) and B)

Correct Answer

verifed

verified

Beta Co.recorded a loss due to impairment of some of its assets.As a result of this journal entry:


A) liabilities are increased.
B) expenses are increased.
C) stockholders' equity is increased.
D) assets are decreased.

E) A) and C)
F) None of the above

Correct Answer

verifed

verified

Depreciation and impairment are different in that:


A) only depreciation results in a decrease in net income.
B) only impairment represents the decline in the current value of the related asset.
C) only depreciation results in a decrease to total assets.
D) only impairment results in a decrease to total assets.

E) A) and D)
F) All of the above

Correct Answer

verifed

verified

A productive asset:


A) will be used up within 1 year from the balance sheet date.
B) is the same as stockholders' equity.
C) is part of inventory.
D) is used to produce goods or services that will be sold to customers.

E) C) and D)
F) B) and D)

Correct Answer

verifed

verified

There are no significant differences between GAAP and IFRS with regards to the accounting for tangible and intangible assets.

A) True
B) False

Correct Answer

verifed

verified

Goodwill:


A) should be treated like most other intangible assets and amortized over a useful life of not more than 40 years.
B) is an accounting measurement of how well a company's employees behave towards the company's customers.
C) should be recorded as a negative value if a company is purchased for less than the net carrying value of its assets.
D) is recorded when the purchasers of a business pay more than the fair value of the assets purchased.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

Showing 281 - 299 of 299

Related Exams

Exam 1

Business Decisions and Financial Accounting

228 Questions

Exam 2

The Balance Sheet

223 Questions

Exam 3

The Income Statement

233 Questions

Exam 4

Adjustments,Financial Statements,and Financial Results

252 Questions

Exam 5

Fraud,Internal Control,and Cash

187 Questions

Exam 6

Merchandising Operations and the Multistep Income Statement

209 Questions

Exam 7

Inventory and Cost of Goods Sold

218 Questions

Exam 8

Receivables,Bad Debt Expense,and Interest Revenue

240 Questions

Exam 10

Liabilities

260 Questions

Exam 11

Stockholders Equity

278 Questions

Exam 12

Statement of Cash Flows

222 Questions

Exam 13

Measuring and Evaluating Financial Performance

183 Questions

Show Answer