A+ Answers

1. The entry to record the cost of a property, plant, or equipment asset would include:
a. acquisition cost
b. freight
c. installation
d. All of the above
2. Which of the following is an example of a land improvement?
a. Shrubbery
b. Fence
c. Driveway
d. All of the above
3. Chocolate Supreme purchased new baking equipment for $15,000 subject to terms 4/10, n/45. The discount was taken. Additional costs included $900 in sales tax and $300 for installation. The total cost to be added to the machinery amount is:
a. $15,900
b. $15,300
c. $15,000
d. $15,600
4. A company purchased new machinery and incurred freight, assembly, and installation cost in addition to the invoice cost of the machinery. These additional costs should be debited to:
a. cash
b. machinery
c. installation expense
d. machinery expense
5. Which of the following is a non-depreciable asset?
a. Desk chairs
b. Land
c. Computer
d. Building
6. The cost of a plant asset was increased for the payment of this year’s insurance premium. this error would cause:
a. the period’s net income to be overstated.
b. the period’s net income to be understated.
c. the period’s end assets to be understated.
d. None of the above.
7. The cost of equipment is expensed:
a. at the time it is paid.
b. over the periods that benefit the company.
c. in the period it is purchased.
d. in the period it is sold.
8 When calculating decking balance depreciation, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause:
a. the period’s depreciation expense to be overstated.
b. the period’s depreciation expense to be understated.
c. the period end assets to be understated.
d. None of the above.
9. Salvage value was ignored when originally calculating the units-of-production depreciation. This error would cause:
a. the period’s net income to be overstated.
b. the period’s net income to be understated.
c. the period end assets to be overstated.
d. None of the above.
  
10. The depreciation method that charges more expense in earlier years than in later years is the:
a. straight-line method
b. double declining-balance method
c. units-of-production method
d. All of the above
11. An example of an intangible asset is:
a. a patent
b. a building.
c. assembly cost
d. land.
12. A company purchases a patent for $50,000. The patent will be amortized over five years. The entry to record the amortization in the first year is:
a. debit Patents $50,000; credit Cash $50,000
b. debit Amortization of Patents $10,000; credit Patents $10,000
c. debit Amortization of Patents $50,000; credit Patents $50,000
d. debit Patents $10,000; credit Amortization of Patents $10,000
13. The allocation of the cost of a natural resource is:
a. depreciation
b. depletion
c. amortization
d. accrual
14. The exclusive right to produce and sell a manuscript is called a:
a. copyright.
b. franchise
c. patent
d. goodwill
15. The write-off of intangible assets is called:
a. depreciation
b. amortization
c. depletion
d. deterioration
16. A coal mine was acquired for $2,000,000. No salvage value was expected, and the company expects to mine 2,000,000 tons of coal. During the first year, it mines and sells 220,000 tons of coal. The depletion expense is:
a. $2,220,000
b. $2,000,000
c. $220,000
d. $24.200
  
17. A manufacturer or seller of a product may identify its merchandise and bar others from using the same identification by getting a:
a. franchise
b. trademark
c. patent
d. copyright.
18. All of the following are intangible assets EXCEPT:
a. patents
b. copyrights
c. franchises
d. Accounts Receivable
19. Intellectual property assets are:
a. depreciated.
b. depleted
c. amortized
d. expensed
20. The process of writing off an intangible asset is:
a. depreciation
b. depletion.
c. amortization
d. None of the above.