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ACCOB2- QUIZ 3 CHAPTER (6-7) QUESTIONS WITH ANSWERS
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ACCOB2- QUIZ 3 CHAPTER (6-7) QUESTIONS WITH ANSWERS...
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ACCOB2- QUIZ 3 CHAPTER (6-7) QUESTIONSWITH ANSWERS
Depreciation is the process of allocating the cost of a plant asset over its service
life in
a) an equal and equitable manner.
b) an accelerated and accurate manner.
c) a systematic and rational manner.
d) a conservative market-based manner. - ANSWER c) a systematic and rational
manner.
The book value of an asset is equal to the
a) asset's market value less its historical cost.
b) book value relied on by secondary markets.
c) replacement cost of the asset.
d) asset's cost less accumulated depreciation. - ANSWER c) a systematic and
rational manner.
The cost of land does not include
a) real estate brokers' commission.
b) annual property taxes.
c) accrued property taxes assumed by the purchaser.
d) title fees. - ANSWER b) annual property taxes.
In computing depreciation, salvage value is
a) the fair market value of a plant asset on the date of acquisition.
b) subtracted from the original cost to determine the plant asset's depreciable
cost.
c) added to the net.purchase price
d) ignored in all the depreciation methods. - ANSWER b) subtracted from the
original cost to determine the plant asset's depreciable cost.
, The calculation of depreciation using the double-declining balance method
a) ignores residual value in determining the amount to which the depreciation
rate is applied.
b) multiplies a constant percentage by the previous year's depreciation expense.
c) yields an increasing depreciation expense each period.
d) multiplies a declining percentage by a constant carrying amount. - ANSWER
a) ignores residual value in determining the amount to which the depreciation
rate is applied.
Expenditures that maintain the operating efficiency and expected productive life
of a fixed asset are
a) expensed when incurred.
b) capitalized as a part of the cost of the asset.
c) debited to the Accumulated Depreciation account.
d) recorded in an asset improvement account. - ANSWER a) expensed when
incurred.
Machinery and equipment acquired by the issuance of equity securities are
valued based on:
a) The cost of the assets acquired.
b) The fair value of the equity securities.
c) The fair value of the assets acquired.
d) The par value of the equity securities. - ANSWER c) The fair value of the
assets acquired.
A gain or loss on disposal of a plant asset is determined by comparing the
a) replacement cost of the asset with the asset's original cost.
b) book value of the asset with the asset's original cost.
c) original cost of the asset with the proceeds received from its sale.
d) book value of the asset with the proceeds received from its sale. - ANSWER
d) book value of the asset with the proceeds received from its sale.
The book value of a plant asset is the difference between the
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