There exist two types of assets namely short term and long term assets. In class we have fully covered what is to know about long-term assets and how they are recorded in financial statements. Take up the quiz below and note the key areas you did not understand in class.
The sum of all of the costs incurred to bring the asset to its intended use.
Only costs that exceed a certain amount.
Only the purchase price.
None of the above.
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Units-of-production method.
Straight-line method.
Accelerated depreciation method.
Estimated residual value method.
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Office supplies. (not a plant asset)
Furniture.
Land.
Patents.
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Capital expenditure.
Expense.
Addition.
Improvement.
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Depreciable cost.
Estimated useful life.
Salvage value.
Accelerated depreciation method.
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Straight-line depreciation.
Units-of-production depreciation.
Double-declining balance depreciation.
Modified accelerated cost recovery system of depreciation.
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Contra-asset account
Contra-revenue account
Contra-liability account.
Expense account.
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Freight costs to deliver the equipment
Installation costs for the equipment
Testing costs to get the equipment ready for use
All of the above
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Less taxes in early years of the asset’s use as compared to later years.
More taxes in early years of the asset’s use as compared to later years.
the same amount of taxes in early years of the asset’s use as in the later years.
None of the above.
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Land
Timber
Minerals
Oil
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Intangible assets.
Natural resources.
Plant assets.
Goodwill.
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Costs of grading and clearing the land
Costs of removing an unwanted building
Cost of fencing (land inprovements)
Both A and B
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Contra-asset account
Contra-revenue account
Contra-liability account
Expense account
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The cost of transporting the machinery to its setup location
The cost of a maintenance insurance plan after the machinery is up and running
The cost of calibrating the machinery after it has been used for a year
The cost of insurance while the machinery is being overhauled
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Capital expenditures.
Expenses.
Additions.
improvements.
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Cost less depreciation expense.
Cost plus accumulated depreciation.
Cost less accumulated depreciation.
Original cost of the asset, plus any capital expenditures.
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$62,500
$81,000
$93,500
$95,000
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Credit to Depreciation Expense.
Debit to Equipment.
Debit to Depreciation Expense.
Debit to Repair Expense.
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The company will incur a loss on the disposal
The equipment account will be credited.
The accumulated depreciation account will be debited.
All of the above will occur.
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Less in the earlier periods
More in the earlier periods
Approximately the same in earlier periods as with other methods.
An accelerated method; therefore, companies cannot use this method.
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Debited to an expense account.
Credited to an expense account.
Debited to an asset account.
Debited to a stockholders’ equity account.
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cash received exceeds the asset’s book value.
Asset’s book value is less than its historical cost.
asset’s book value is greater than the amount of cash received from the sale.
Cash received exceeds the cash paid for the replacement asset.
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Land improvement.
Plant and equipment.
a building
land.
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Construction cost of a parking lot
Landscaping
Real estate brokerage commission
Lighting
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$51,000.
$59,500.
$68,000.
Nothing; Accumulated Depreciation is not debited.
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Increases total assets and decreases total equity.
Decreases total assets and increases total equity.
Decreases both total assets and total equity.
Increases both total assets and total equity.
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$250,000
$262,500
$300,000
$342,857
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Amortization.
Depletion.
Matching.
Depreciation.
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Provides the fastest tax deductions.
Decreases immediate tax payments.
Allows the company to reinvest the tax savings back in the business.
Does all of the above.
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46,000
46,850
$48,050
$49,050
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Do not extend the life of an asset.
Return an asset to its prior condition.
Increase the asset’s capacity.
Do all of the above.
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Accumulated Depreciation.
Depreciation Expense.
Equipment.
Repair Expense.
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Straight-line
Units-of-production
Double-declining balance
The method selected depends upon the specific natural resource
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A debit to Depletion Expense and credit to Accumulated Depreciation.
A debit to Accumulated Depletion and a credit to Depletion Expense.
A debit to Depletion Expense and a credit to Accumulated Depletion.
None of the above.
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Scrap value.
Salvage value.
Residual value.
Any of the above.
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Land.
Land improvements.
Land improvements expense.
Building.
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Capitalized and depreciated over a period not to exceed 20 years.
Capitalized and amortized over the useful life of the asset.
Either capitalized and depreciated or expensed immediately at the option of the accountant.
Expensed on the current year’s income statement.
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Salvage value of the asset and the future market value of the asset.
Book value and the current market value of the asset.
Cost of the asset and the cash required to replace the asset.
revenues earned by the asset and the cost of the asset.
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