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13) Which of the following included in the cost of

Question : 13) Which of the following included in the cost of : 1412221

 

13) Which of the following is included in the cost of land?

A) cost of fencing

B) cost of paving

C) brokerage commission

D) cost of outdoor lighting

 

14) Which of the following is included in the cost of a plant asset?

A) amounts paid to make the asset ready for its intended use

B) regular repair and maintenance cost

C) replacement of damaged parts of the asset

D) wages of workers who work with the asset

 

15) Which of the following asset categories would include the cost of clearing land and removing unwanted buildings?

A) land

B) buildings

C) land improvements

D) machinery and equipment

 

16) Which of the following is a characteristic of a plant asset, such as a building?

A) It is used in the operation of a business.

B) It is available for sale to customers in the ordinary course of business.

C) It has a short useful life.

D) It will have a negligible value at the end of its useful life.

17) Hastings Corporation has purchased a group of assets for $15,000. The assets and their relative market values are listed below.

 

Land

$6,500

Equipment

2,000

Building

9,000

 

Which of the following amounts would be debited to the Land account?

A) $1,962

B) $5,571

C) $1,714

D) $7,714

 

18) Fred Inc. owns a delivery truck. Which of the following costs, associated with the truck, will be capitalized and depreciated?

A) modification for new use

B) change of oil filters

C) replacement of tires

D) normal repair of engine

 

19) Fred Inc. owns a delivery truck. Which of the following costs, associated with the truck, will be treated as a revenue expenditure?

A) oil change and lubrication

B) major engine overhaul

C) modification for new use

D) addition to storage capacity

20) A company's accountant capitalized a payment that should be recorded as a revenue expenditure. How will this error affect the financial statements of the company?

A) net income will be understated

B) expenses will be overstated

C) assets will be overstated

D) liabilities will be overstated

 

21) A company's accountant capitalized a payment that should be recorded as a revenue expenditure. How will this error affect the financial statements of the corporation?

A) net income will be overstated

B) revenues will be understated

C) assets will be understated

D) liabilities will be understated

 

22) Nobells Corp. has acquired land and paid an amount of $500 as brokerage to acquire the land. However, the company's accountant has recorded the $500 as a revenue expenditure. What is the effect of this error?

A) net income is understated by $500

B) liabilities are overstated by $500

C) revenue is overstated by $500

D) assets are overstated by $500

 

 

 

 

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