Info
Warning
Danger

Study Resources (Accounting)

11) An example of an intangible asset is: A) land. B) equipment. C) coal mine. D) goodwill. 12) Long-lived tangible assets that are used in the operation of the business are called: A) intangible assets. B) natural resources. C) plant assets. D) goodwill. 13) The only plant asset that does not depreciate is: A) office supplies. B) furniture. C) land. D) patents. 14) An asset.
8 Views
View Answer
21) When the investment is readily convertible to cash and the investor plans to convert the investment to cash within one year, the investment is shown on the balance sheet as: A) short-term. B) long-term. C) equity. D) either long-term or short-term. 22) The following is the proper order for assets on a balance sheet: A).
2 Views
View Answer
17) ABC, Inc. purchased new machinery in order to improve its production process. Classify each of the following expenditures as a capital expenditure (CE) or an immediate expense (IE): A)Purchase price B)Sales tax paid on the purchase price C)Transportation costs D)Installation E)Training of personnel for initial operation of the machinery F)Wages paid to employees that operate.
3 Views
View Answer
11) Double-declining-balance depreciation computes total depreciation by multiplying the asset's cost by two times the straight-line rate. 12) The use of the straight-line method of computing depreciation increases a company's tax liability, thereby increasing the company's cash flow. 13) Under the double-declining balance method of depreciation, residual value is initially ignored. 14) It.
4 Views
View Answer
21) Amortization expense: A) is the title of the expense associated with natural resources. B) is recorded for intangible assets with a finite life. C) is recorded for assets with an indefinite life. D) cannot be credited directly to the asset account. 22) Which of the following intangible assets has an indefinite life? A) Patents B) Copyrights C).
3 Views
View Answer
8.4   Learning Objective 8-4 1) The consolidation method of accounting is appropriate when an investor controls an investee by ownership of more than 50% of the investee's common stock. 2) Consolidated financial statements are prepared in place of the financial statements for the parent and subsidiary companies. 3) A year-end elimination entry is.
2 Views
View Answer
31) The balance in the Unrealized Gains and Losses on Available-for-sale Securities account appear in which financial statement? A) The balance sheet as a contra asset account. B) The income statement under Other Expenses and Losses. C) The balance sheet, as part of the stockholders' equity section. D) Not shown on the financial statements.
2 Views
View Answer
7.3   Learning Objective 7-3 1) The depreciation process follows the matching principle. 2) The Accumulated Depreciation account is an income statement account. 3) Obsolescence may cause an asset's useful life to be longer than the asset's physical life. 4) The units-of-production method is an accelerated depreciation method. 5) Book value equals the cost of the.
3 Views
View Answer
7.4   Learning Objective 7-4 1) To account for the disposal of a plant asset, the cost of the asset and its related accumulated depreciation are removed from the books. 2) Accumulated depreciation is credited for the amount of depreciation expense for the current period. 3) A nonmonetary exchange is based on the fair.
3 Views
View Answer
31) Godert Pharmaceutical Company has many scientists working in their labs trying to develop an anti-aging drug. The cost of this research and development must be: A) expensed as incurred. B) set up as an intangible asset and amortized over 20 years. C) set up as an intangible and tested for impairment on.
2 Views
View Answer
61) Buggy Company purchased equipment on June 3, 2012, for $100,000. The residual value is zero and the estimated life is 10 years. Compute depreciation expense for the year ending December 31, 2012, if the company uses the double-declining method of depreciation. A) $10,000 B) $11,667 C) $13,337 D) $20,000 62) Bay Back Company acquired.
4 Views
View Answer
51) On January 4, 2012, Peggy's Cafe acquired equipment for $180,000. The estimated life of the equipment is 4 years or 42,500 hours. The estimated residual value is $10,000. What is the depreciation for 2012, if Peggy's Cafe uses the asset 14,100 hours and uses the units-of-production method of depreciation? A).
2 Views
View Answer
21) Depreciation expense: A) allocates a portion of the cost of an asset against the revenue the asset helps earn each period. B) is not required for plant assets according to GAAP. C) is reported on the balance sheet. D) is required for land according to GAAP. 22) The depreciation process attempts to match the: A).
4 Views
View Answer
9.1   Learning Objective 9-1 1) Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer. 2) A current liability must be paid out of current profits. 3) Purchasing merchandise inventory on account results in a liability. 4) Notes payable usually require the borrower to accrue interest expense.
7 Views
View Answer
8.5   Learning Objective 8-5 1) Sales of available-for-sale investments are reported as investing activities on the Consolidated Statement of Cash Flows. 2) The purchases of available-for-sale investments would appear on a statement of cash flows in: A) the financing activities section. B) the operating activities section. C) the investing activities section. D) none of the above..
2 Views
View Answer
35) The Meat Company purchased assets for a lump sum price of $1,000,000. The assets purchased had an appraised value of: Equipment$560,000 Land$210,000 Building$630,000 Prepare the appropriate journal entry if The Meat Company paid cash for this transaction. 36) Auto Shop, Inc., incurred the following costs in acquiring plant assets: a.Purchased land for a $100,000 down.
3 Views
View Answer
11) Some trademarks have a definite life set by a contract and should be amortized. 12) All of the following are classified as natural resources and are depleted EXCEPT for: A) land. B) timber. C) minerals. D) oil. 13) Natural resources: A) are not physically used up over time. B) have a contra account, accumulated amortization. C) are recorded.
4 Views
View Answer
8.2   Learning Objective 8-2 1) Dividend revenue is recorded in a stock dividend. 2) Unrealized Gain/Loss on investments account appears under other comprehensive income on a separate section of the income statement. 3) Available-for-sale investments in stock are reported on the balance sheet at cost. 4) Available-for-sale investments are adjusted from cost to market.
2 Views
View Answer
  8.1   Learning Objective 8-1 1) Long-term investments are listed on the balance sheet after current assets and property, plant, and equipment. 2) Investments can never be classified as short-term investments. 3) Stocks and bonds projected to be held for longer than one year are long-term investments. 4) On the balance sheet, assets are listed.
6 Views
View Answer
7.5   Learning Objective 7-5 1) Accumulated depletion reduces equity, as this account is a contra-revenue account. 2) Natural resources are reported in the Intangible Assets section of the income statement. 3) Natural resources are also called wasting assets. 4) Intangibles can have finite or infinite lives. 5) Intangible assets with finite lives that can be.
3 Views
View Answer
7.6   Learning Objective 7-6 1) If an asset is impaired, the company is required to adjust the carrying value downward from its book value to its fair value. 2) Which of the following is a correct statement about asset impairment? A) An asset is impaired if the net book value exceeds the estimated.
4 Views
View Answer
21) For accounting purposes, the method used to account for long-term investments in common stock is determined by: A) the amount paid for the stock by the investor. B) the extent of an investor's influence on the investee's operating decisions and policies. C) whether the stock has paid dividends in the past years. D).
2 Views
View Answer
75) Martin Motors purchased a machine that will help diagnose problems with engines. The machine cost $210,000 on January 10, 2010 and a residual value of $10,000 was anticipated, with a useful life of 5 years. These statistics are available: DDB Gross Profit 400,000 Operating expenses 180,000 Income before depreciation and taxes 220,000 Depreciation 84,000 Income before taxes 136,000 Taxes (35%) 47,600 Net Income 88,400 Martin.
3 Views
View Answer
41) An investment in common stock acquired during the year at a cost of $40,000 has a year-end market value of $42,250. The year-end adjusting entry requires a: A) debit to Long-Term Investments for $2,250. B) debit to Allowance to Adjust Investments to Market for $2,250. C) credit to Allowance to Adjust Investments.
2 Views
View Answer
21) Under the equity method of accounting for stock investments, the Investment account is decreased for the receipt of a dividend because: A) it is assumed that income will also be received. B) the dividend decreases the investee's owners' equity, and therefore the investor's investment decreases. C) the dividend decreases the investee's owners'.
2 Views
View Answer
11) Company A replaced the tires and painted several of its vehicles during the year. These costs should be: A) debited to Equipment. B) depreciated over the life of the vehicles. C) credited to Accumulated Depreciation. D) debited to Repair Expense. 12) On June 1, Puff's Trucking Company paid $3,000 to overhaul the engine on.
3 Views
View Answer
21) A noncontrolling (minority) interest arises when: A) a parent company excludes the subsidiary company from the consolidated financial statements. B) a parent company owns less than 100% of the stock of a subsidiary. C) a subsidiary company is not included in the consolidated financial statements. D) a subsidiary company represents less than 20%.
3 Views
View Answer
7.2   Learning Objective 7-2 1) The distinction between a capital expenditure and an expense can be difficult to determine. 2) Many companies will have a policy of expensing all items above a certain dollar amount. 3) Costs that extend an asset's useful life should be capitalized. 4) An expenditure that increases an asset's capacity.
7 Views
View Answer
11) Realized gains on the sale of available-for-sale securities cannot be used to compute net income. 12) An investee should report available-for-sale securities that might be sold in the next 12 months as a short-term investment. 13) Dividends received on stock investments of less than 20% should be credited to the Investment.
3 Views
View Answer
21) The cost of installing lights in the parking lot should be recorded as: A) land. B) land improvements. C) building. D) equipment. 22) Although located on the land, they are subject to decay and their cost is depreciated. This is the definition of: A) land improvements. B) plant and equipment. C) buildings. D) land. 23) The ________ method is.
3 Views
View Answer
42) On June 1, 2011, Conqueror Company purchased Standard Corp for $26 million cash. At the time of purchase, the market value of Standard's assets was $24,000,000 and Mollie had liabilities of $3,000,000. Record the purchase transaction on Biddy Corp's books. 43) On June 1, 2011, Conqueror Company purchased Standard Corp for.
2 Views
View Answer
8.3   Learning Objective 8-3 1) When an investor owns 35% of the stock of another business, cash dividends received from the investee company are generally recorded by increasing the value of the Investment account. 2) The equity method is used to account for stock investments in which the investor company owns less.
2 Views
View Answer