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Acc Exam 2 Study Guide With complete solution 2024/25
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Acc Exam 2 Study Guide With complete solution 2024/25
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Acc Exam 2 Study Guide With completesolution 2024/25
Plant assets are defined as:
Tangible assets used in a company's operations that have a useful life of more than one
accounting period.
One characteristic of plant assets is that they are:
used in operations
Which of the following is not a relevant factor in computing depreciation?
Market value
Depreciation:
Is the process of allocating the cost of a plant asset to expense while it is in use.
The useful life of a plant asset is:
the length of time it is productively used in a company's operations
The term inadequacy refer to:
The inability of a plant asset to meet its demands.
The term, obsolescence, as it relates to the useful life of an asset, refers to:
The process of becoming outdated and no longer used.
The modified accelerated cost recovery cost recovery system (MACRS)
Is not acceptable for financial reporting
The calculation of total asset turnover is:
Net sales divided by average total assets
Land improvements are:
Additions to land that have limited useful lives
Which of the following is not classified as a plant asset?
Patent
The cost of land would not include:
cost of parking lot lighting
The formula to compute annual straight-line depreciation is:
(Cost minus salvage value) divided by the useful life in periods.
The total cost of an asset minus accumulated depreciation is called:
Booke value
The depreciation method that charges the same amount of expense to each period of
the asset's useful life is called:
straight-line depreciation
The depreciation method that allocates an equal portion of the total depreciable cost for
a plant asset to each unit produced is called:
Units-of-production depreciation
The depreciation method which uses a depreciation rate that is a multiple of the
straight-line rate is called:
Declining-balance depreciation
The depreciation method that produces more depreciation expense during the early
years of an asset's life and less expense in the later years is a(n):
, Accelerated depreciation method.
Revenue expenditures
Are costs that do not materially increase a plant asset's life or capabilities.
Another name for a capital expenditure is:
Balance sheet expenditure.
To capitalize an expenditure is to:
Increase an asset account
Extraordinary repairs:
Are expenditures that extend an asset's useful life beyond its original estimate.
Which of the following pertaining to ordinary repairs is false?
They extend the useful life of an asset beyond its original estimate by several years.
Betterments:
Are expenditures that make a plant asset more efficient or productive.
Depletion:
The process of allocating the cost of a natural resource to the period when it is
consumed.
Intangible assets do not include:
Land held as an investment
Amortization is:
The allocation of the cost of an intangible asset to expense over its estimated useful life.
Owning a patent:
Gives the owner exclusive rights to manufacture and sell a patented item or to use a
process for 20 years.
Holding a copyright:
Gives its owner the exclusive right to publish and sell a musical or literary work during
the life of the creator plus 70 years.
A leasehold is:
The rights the lessor grants to the lessee under the terms of a lease.
The meaning of goodwill in accounting is:
The amount by which a company's value exceeds the value of its individual assets and
liabilities.
Liabilities that are due within one year (or the company's operating cycle if longer) are:
Current liabilities.
Obligations due after one year (or the company's operating cycle if longer) are reported
as:
Long-term liabilities.
In order to be reported, liabilities:
Are at times estimated if the exact amount is not known.
Which of the following pertaining to known liabilities is false?
They may depend on a future event occurring.
Accounts Payable are:
amounts owed to suppliers for products or services purchased on credit
sales taxes payable is reported as an:
current liability
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