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| 1 | |
If assets are not fully depreciated when sold, the accountant must first make an entry to bring depreciation up to date. |
| | A) | True |
| | B) | False |
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| 2 | |
Land is subject to depreciation. |
| | A) | True |
| | B) | False |
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| 3 | |
The book value of an asset equals the asset's cost less depreciation expense for the year. |
| | A) | True |
| | B) | False |
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| 4 | |
As Accumulated Depreciation increases, book value increases. |
| | A) | True |
| | B) | False |
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| 5 | |
An accelerated depreciation method yields larger depreciation expenses in the early years of an asset's life and less depreciation in later years. |
| | A) | True |
| | B) | False |
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| 6 | |
The straight-line method is classified as an accelerated depreciation method. |
| | A) | True |
| | B) | False |
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| 7 | |
The cost of grading would be included in the cost of land. |
| | A) | True |
| | B) | False |
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| 8 | |
The declining-balance method and the straight-line method both yield an increasing charge for depreciation each year. |
| | A) | True |
| | B) | False |
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| 9 | |
Loss on Disposal of Equipment should be listed on the income statement. |
| | A) | True |
| | B) | False |
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| 10 | |
The balances of the Accumulated Depreciation accounts appear in the Plant and Equipment section of the balance sheet. |
| | A) | True |
| | B) | False |
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| 11 | |
Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use. |
| | A) | True |
| | B) | False |
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| 12 | |
The amount paid for extraordinary repairs of a truck is debited to the Truck account. |
| | A) | True |
| | B) | False |
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| 13 | |
When using the Declining Balance method of depreciation, the formula is [(Cost-Salvage Value) x two times the straight-line rate] |
| | A) | True |
| | B) | False |
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| 14 | |
If an asset purchase price was $4,000 and it had an expected useful life of 6 years and an expected salvage value of $400, using the Straight-line method of depreciation would result in $600 of depreciation expense in the first full year. |
| | A) | True |
| | B) | False |
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| 15 | |
If an asset purchase price was $4,200 and it had an expected useful life of 7 years and an expected salvage value of $700, using the declining balance method of depreciation would result in $1000 of depreciation expense in the first full year. |
| | A) | True |
| | B) | False |
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| 16 | |
Land improvements are |
| | A) | considered an asset. |
| | B) | deducted from the cost of land. |
| | C) | included in the cost of land. |
| | D) | included as an expense in the year the land is purchased. |
| | E) | none of these. |
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| 17 | |
A company's delivery truck was purchased on 10/1/X1, at a cost of $15,300. It was estimated to have a useful life of 6 years and an expected salvage value of $300.Using the straight-line method of depreciation, what would be the amount of depreciation to record in the first partial year. |
| | A) | $2,500. |
| | B) | $625. |
| | C) | $2,550. |
| | D) | $637.50. |
| | E) | none of these. |
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| 18 | |
Equipment that cost $20,000 and has a book value of $3,000 is sold for $3,200. What is true about the entry that is made? |
| | A) | Equipment is credited for $17,000. |
| | B) | Accumulated Depreciation is credited for $17,000. |
| | C) | Accumulated Depreciation is debited for $17,000. |
| | D) | Loss on Disposal of Plant and Equipment is credited for $900. |
| | E) | None of these is true. |
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| 19 | |
Included in the cost of land is (are) |
| | A) | the cost of a survey. |
| | B) | the cost of delinquent taxes. |
| | C) | a city assessment for street repairs. |
| | D) | all of these. |
| | E) | none of these. |
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| 20 | |
If a building and land are purchased for a lump-sum payment of $132,000, how much would be allocated to Land if the land is appraised at $40,000 and the building at $80,000? |
| | A) | $52,800 |
| | B) | $44,000 |
| | C) | $33,000 |
| | D) | $26,400 |
| | E) | none of these |
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| 21 | |
An accelerated method of depreciation used for federal income tax returns based on property acquired after 1986 is called |
| | A) | units of production. |
| | B) | double declining-balance. |
| | C) | MACRS. |
| | D) | straight-line. |
| | E) | none of these. |
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| 22 | |
On January 4, a truck with a useful life of five years or 45,000 miles is purchased for $18,000. At the end of five years, the trade-in value is estimated to be $2,500. Under the double-declining-balance method, the depreciation for the first year is |
| | A) | $7,500. |
| | B) | $9,000. |
| | C) | $4,500. |
| | D) | $3,750. |
| | E) | none of these. |
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| 23 | |
On January 6, equipment with a useful life of seven years is purchased for $15,000. At the end of seven years, the trade-in value is estimated to be $5,000. Under the straight-line method, the depreciation for the first year is |
| | A) | $1,327.58. |
| | B) | $1,457.28. |
| | C) | $1,438.52. |
| | D) | $1,458.27. |
| | E) | none of these. |
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| 24 | |
Equipment that cost $20,000 and has a book value of $3,000 is sold for $3,500. What is true about the entry that is made? |
| | A) | Equipment is credited for $17,000. |
| | B) | Accumulated Depreciation is credited for $17,000. |
| | C) | Loss on Disposal of Equipment is debited for $500 |
| | D) | Gain on Disposal of Equipment is credited for $500. |
| | E) | None of these is true. |
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| 25 | |
The book value of an asset may be described as |
| | A) | the market price of the asset if it were sold today. |
| | B) | the original cost of the asset. |
| | C) | the accumulated depreciation since the asset was purchased. |
| | D) | the cost of the asset minus accumulated depreciation. |
| | E) | none of these. |
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| 26 | |
With depreciation recorded up to date, the entry to record the cash sale for $3,800 of equipment with a cost of $6,600 and total depreciation of $3,200 is |
| | A) | debit Cash, debit Accumulated Depreciation, debit Gain on Disposal of Plant and Equipment, credit Equipment. |
| | B) | debit Cash, debit Accumulated Depreciation, credit Gain on Disposal of Plant and Equipment, credit Equipment. |
| | C) | debit Cash, debit Depreciation Expense, credit Gain on Disposal of Plant and Equipment, credit Equipment. |
| | D) | debit Cash, debit Depreciation Expense, debit Loss on Disposal of Plant and Equipment, credit Equipment. |
| | E) | none of these. |
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| 27 | |
The straight-line method of depreciation results in |
| | A) | increasing amounts of depreciation taken every period over the asset's life. |
| | B) | the same amount of depreciation taken every period over the asset's life.. |
| | C) | decreasing amounts of depreciation taken every period over the asset's life.. |
| | D) | the asset being used for a longer period of time by the business. |
| | E) | is none of these. |
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| 28 | |
If the estimated useful life of an asset costing $40,000 is four years, the rate used to compute depreciation using the double-declining-balance method is |
| | A) | 25 percent. |
| | B) | 12.5 percent. |
| | C) | 50 percent. |
| | D) | 9 percent. |
| | E) | none of these. |
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| 29 | |
A mineral deposit with an estimated 150,000 tons of available ore is purchased for $750,000, and we expect $50,000 salvage value. The depletion charge per ton of ore mined is |
| | A) | $4.33 per ton. |
| | B) | $5 per ton. |
| | C) | $4.67 per ton. |
| | D) | $5.33 per ton |
| | E) | none of these. |
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| 30 | |
Which of the following accounts is NOT considered an intangible asset. |
| | A) | Patent |
| | B) | Copyright |
| | C) | Building |
| | D) | Trademark |
| | E) | Franchise. |
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