Question 1

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

Accepted Answer

A)  $5,000.
B)  $12,500.
C)  $17,500.
D)  impossible to determine from the facts given.

Question 2

The depletion calculation is similar to which of the following depreciation methods?

Accepted Answer

A)  Double-declining-balance
B)  Straight-line
C)  Group
D)  Production

Question 3

A capital expenditure will result in an immediate increase in long-term assets.

Accepted Answer

A) True 
 B)False

Question 4

Improperly classifying large expenditures as assets rather than expenses

Accepted Answer

A)  could constitute fraud.
B)  understates income for the period.
C)  understates equity on the balance sheet.
D)  results in none of these options.

Question 5

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

Accepted Answer

A)  is incurred subsequent to asset use.
B)  exceeds a certain dollar amount.
C)  is incurred prior to asset use.
D)  will expire in less than one year.

Question 6

For tax purposes,small businesses may expense the first $250,000 of equipment expenditures,rather than having to allocate their costs over a number of years.

Accepted Answer

A) True 
 B)False

Question 7

The cost of a sewage system should be included in the Land Improvements account.

Accepted Answer

A) True 
 B)False

Question 8

Free cash flow is a good measure of a company's ability to finance long-term assets.

Accepted Answer

A) True 
 B)False

Question 9

Gain on Sale of Machinery is recorded as a debit.

Accepted Answer

A) True 
 B)False

Question 10

On January 1,2014,Huan Manufacturing Company purchased for $94,000 a machine that will produce an estimated 75,000 units of Product X.The machine has an estimated useful life of five years and an estimated residual value of $4,000.Calculate the following amounts: (a)the carrying value of the machine after it has been used for three and one-half years,under the straight-line method; (b)depreciation expense for 2015,under the production method (assume that 13,000 units were produced that year); and (c)accumulated depreciation at the end of 2015,under the double-declining-balance method.(Show your work.)

Accepted Answer

a. $31,000 [($94,000 - $4,000)<font face="symbol">F...

Question 11

What commitments must a company account for in determining its free cash flow?

Accepted Answer

Free cash flow is the amount of cash tha...

Question 12

A revenue expenditure results in a

Accepted Answer

A)  debit to an expense account.
B)  credit to an expense account.
C)  debit to an asset account.
D)  credit to an asset account.

Question 13

Intangible assets are subject to a process called depreciation.

Accepted Answer

A) True 
 B)False

Question 14

When an extraordinary repair has been made to equipment,which of the following accounts is debited?

Accepted Answer

A)  Extraordinary Repairs
B)  Equipment
C)  Accumulated Deprecation
D)  Cash

Question 15

Which of the following is not a component of free cash flow?

Accepted Answer

A)  Purchases of plant assets
B)  Net income
C)  Dividends
D)  Net cash flows from operating activities

Question 16

A negative free cash flow means that all cash commitments have been met.

Accepted Answer

A) True 
 B)False

Question 17

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

Accepted Answer

A) True 
 B)False

Question 18

Equipment is purchased for $60,000.It has a five-year useful life and a $10,000 residual value.Under the double-declining-balance method,what is the depreciation expense for year 3?

Accepted Answer

A)  $6,400
B)  $7,200
C)  $7,680
D)  $8,640

Question 19

Gomez Company purchases a piece of equipment on Jan.2,2014,for $30,000.The equipment has an estimated life of eight years or 50,000 units of production and an estimated residual value of $3,000.Lester uses a calendar fiscal year.The entry to record the amount of depreciation for 2014,using the straight-line method,is

Accepted Answer

A)  debit to Depreciation Expense,3,750; credit to Cash,3,750
B)  debit to Depreciation Expense,3,375; credit to Accumulated Depreciation,3,375
C)  debit to Depreciation Expense,2,500; credit to Accumulated Depreciation,2,500
D)  debit to Accumulated Depreciation,2,250; credit to Cash,2,250

Question 20

Accelerated methods of depreciation result in lower net income in the last years of an asset's life compared to the straight-line method.

Accepted Answer

A) True 
 B)False

Exam 10: Long -Term Assets

Improperly classifying large expenditures as assets rather than expenses

Correct Answer
verified

A capital expenditure will result in an immediate increase in long-term assets.

Correct Answer
verified

Equipment is purchased for $60,000.It has a five-year useful life and a $10,000 residual value.Under the double-declining-balance method,what is the depreciation expense for year 3?

Correct Answer
verified

Gain on Sale of Machinery is recorded as a debit.

Correct Answer
verified

The depletion calculation is similar to which of the following depreciation methods?

Correct Answer
verified

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

Correct Answer
verified

Correct Answer
verified
a. $31,000 [($94,000 - $4,000)F...
View Answer

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

Correct Answer
verified

A negative free cash flow means that all cash commitments have been met.

Correct Answer
verified

The cost of a sewage system should be included in the Land Improvements account.

Correct Answer
verified

Intangible assets are subject to a process called depreciation.

Correct Answer
verified

Which of the following is not a component of free cash flow?

Correct Answer
verified

For tax purposes,small businesses may expense the first $250,000 of equipment expenditures,rather than having to allocate their costs over a number of years.

Correct Answer
verified

When an extraordinary repair has been made to equipment,which of the following accounts is debited?

Correct Answer
verified

Free cash flow is a good measure of a company's ability to finance long-term assets.

Correct Answer
verified

Accelerated methods of depreciation result in lower net income in the last years of an asset's life compared to the straight-line method.

Correct Answer
verified

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

Correct Answer
verified

Correct Answer
verified

What commitments must a company account for in determining its free cash flow?

Correct Answer
verified
Free cash flow is the amount of cash tha...
View Answer

A revenue expenditure results in a

Correct Answer
verified

Exam 10: Long -Term Assets

Improperly classifying large expenditures as assets rather than expenses

Correct AnswerverifiedShow Answer

A capital expenditure will result in an immediate increase in long-term assets.

Correct AnswerverifiedShow Answer

Equipment is purchased for $60,000.It has a five-year useful life and a $10,000 residual value.Under the double-declining-balance method,what is the depreciation expense for year 3?

Correct AnswerverifiedShow Answer

Gain on Sale of Machinery is recorded as a debit.

Correct AnswerverifiedShow Answer

The depletion calculation is similar to which of the following depreciation methods?

Correct AnswerverifiedShow Answer

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

Correct AnswerverifiedShow Answer

Correct Answerverifieda. $31,000 [($94,000 - $4,000)F...View AnswerShow Answer

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

Correct AnswerverifiedShow Answer

A negative free cash flow means that all cash commitments have been met.

Correct AnswerverifiedShow Answer

The cost of a sewage system should be included in the Land Improvements account.

Correct AnswerverifiedShow Answer

Intangible assets are subject to a process called depreciation.

Correct AnswerverifiedShow Answer

Which of the following is not a component of free cash flow?

Correct AnswerverifiedShow Answer

For tax purposes,small businesses may expense the first $250,000 of equipment expenditures,rather than having to allocate their costs over a number of years.

Correct AnswerverifiedShow Answer

When an extraordinary repair has been made to equipment,which of the following accounts is debited?

Correct AnswerverifiedShow Answer

Free cash flow is a good measure of a company's ability to finance long-term assets.

Correct AnswerverifiedShow Answer

Accelerated methods of depreciation result in lower net income in the last years of an asset's life compared to the straight-line method.

Correct AnswerverifiedShow Answer

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What commitments must a company account for in determining its free cash flow?

Correct AnswerverifiedFree cash flow is the amount of cash tha...View AnswerShow Answer

A revenue expenditure results in a

Correct AnswerverifiedShow Answer

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a. $31,000 [($94,000 - $4,000)F...
View Answer

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Free cash flow is the amount of cash tha...
View Answer

Correct Answer
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