Grade Details - All Questions
Question 1.-A company receives a 10%, 90-day note for $1,500. The total interest due upon the maturity date is:
Student Answer:
$37.50
$150.00
$75.00
$50.00
Comments:
Question 2.- A company receives a 6.2%, 60-day note for $9,650. The total amount of cash due on the maturity date is:
Student Answer:
$598.30
$99.72
$9,650.00
$9,749.72
Comments:
Question 3. - The amount due on the date of maturity for a $6,000, 60-day 8%, note receivable is:
Student Answer:
$6,000
$6,480
$5,520
$6,080
Comments:
Question 4. - Plant assets are:
Student Answer:
Current assets
Used in operations
Natural resources
Long-term investments
Comments:
Question 5. - Once the estimated depreciation expense for an asset is calculated:
Student Answer:
It cannot be changed due to the historical cost principle
It may be revised based on new information
Any changes are accumulated and recognized when the asset is sold
The estimate itself cannot be changed; however, new information should be disclosed in financial statement footnotes
Comments:
Question 6. - When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:
Student Answer:
$5,375.00
$2,687.50
$5,543.75
$10,750.00
$2,856.25
Comments:
Question 7. - A company's annual accounting period ends on December 31. During the current year a depreciable asset which cost $24,000 was purchased on October 1. The asset has a $1,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a 6-year life. What is the total depreciation expense for the current year?
Student Answer:
$3,833.33
$958.33
$4,000.00
$1,000.00
$1,041.67
Comments:
Question 8. - Both the straight-line depreciation method and the double-declining-balance depreciation method:
Student Answer:
Produce the same total depreciation over an asset's useful life
Produce the same depreciation expense each year
Produce the same book value each year
Are acceptable for tax purposes only
Are the only acceptable methods of depreciation for financial reporting
Comments:
Question 9. - Total asset turnover is used to evaluate:
Student Answer:
The efficiency of management's use of assets to generate sales
The need for asset replacement
The number of times operating assets were sold during the year
The cash flows used to acquire assets
The relation between asset cost and book value
Comments:
Question 10. - Dell had net sales of $35,404 million. Its average total assets for the period were $14,502 million. Dell's total asset turnover is equal to:
Student Answer:
0.40
0.35
1.45
2.44
3.50
Comments:
Question 11. - A depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate each period to the asset's beginning book value is called:
Student Answer:
Book value depreciation
Declining-balance depreciation
Straight-line depreciation
Units-of-production depreciation
Modified accelerated cost recovery system (MACRS) depreciation
Comments:
Question 12. - A company purchased a machine for $970,000. The machine has a useful life of 12 years and a residual value of $4,500. It is estimated that the machine could produce 1,000,000 units over its useful life. In the first year, 200,000 units were produced. In the second year, production increased to 300,000 units. Using the units-of-production method, what is the book value of this asset at the end of the second year of operations?
Student Answer:
$482,750
$487,250
$485,000
$291,000
Comments:
Question 13. - Another name for a capital expenditure is:
Student Answer:
Revenue expenditure
Asset expenditure
Long-term expenditure
Contributed capital expenditure
Balance sheet expenditure
Comments:
Question 14. - Inadequacy refers to:
Student Answer:
The insufficient capacity of a company's plant assets to meet the company's growing production demands
An asset that is worn out
An asset that is no longer useful in producing goods and services
The condition where the salvage value is too small to replace the asset
Comments:
Question 15. - A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000 and had a five-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,200 and its total useful life was increased from 5 years to 6 years. Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life:
Student Answer:
$1,000
$1,800
$1,467
$1,600
Comments:
Question 16. - A company purchased property for $100,000. The property included a building, a parking lot and land. The building was appraised at $62,000; the land at $45,000 and the parking lot at $18,000. The value of the land that will be included in the accounting record is:
Student Answer:
$0
$36,000
$42,000
$45,000
Comments:
Question 17. - The total cost of an asset less its accumulated depreciation is called:
Student Answer:
Historical cost
Book value
Present value
Current (market) value
Replacement cost
Comments:
Question 18. - A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:
Student Answer:
Accelerated depreciation
Declining-balance depreciation
Straight-line depreciation
Units-of-production depreciation
Modified accelerated cost recovery system (MACRS) depreciation.
Comments:
Question 19. - Blanket Corporation sold equipment for cash of $40,500. Accumulated depreciation on the sale date amounted to $34,000 and a loss of $1,800 was recognized on the sale.
What was the original cost of the asset?
Student Answer:
$72,300
$75,900
$4,700
$76,300
$42,300
Comments:
Question 20. - A company purchased a mineral deposit for $800,000. It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000. In the current year, the company mined and sold 90,000 tons of ore. Its depletion expense for the current period is equal to:
Student Answer:
$15,000
$60,000
$150,000
$56,250
$139,500
Comments:
Question 21. - On September 1, 2010, Drill Far Company purchased a tract of land for $2,300,000. The land is estimated to have a salvage value or $50,000, a useful life of four years, and contain an estimated 4,234,000 tons of iron ore. The company also purchased equipment to use in the extraction process that cost $220,450. The company plans to abandon the equipment when the ore is completely mined. During 2010, the company extracted and sold 1.25 million tons of ore. What is the depletion expense recorded for 2010?
Student Answer:
$575,000
$679,027
$664,250
$562,500
$600,000
Comments:
Question 22. - A company purchased equipment valued at $200,000 on January 1. The equipment has an estimated useful life of six years or five million units. The equipment is estimated to have a salvage value of $13,400. Assuming the straight-line method of depreciation, what is the book value at the end of the second year if 1.5 million units were produced?
Student Answer:
$166,667.00
$88,977.80
$96,416.25
$168,900.00
$137,800.00
Comments:
Question 23. - On December 31, 2010, Stable Company sold a piece of equipment that was purchased on January 1, 2005. The equipment originally cost $820,000 and has an estimated useful life of eight years. Stable uses the straight-line method of depreciation. What is the gain/loss on the sale of equipment that Stable will recognize if the equipment was sold for $230,000?
Student Answer:
$230,000 Gain
$25,000 Loss
$25,000 Gain
$73,750 Gain
$0; no gain or loss
Comments:
Question 24. - Cobb Corn Company purchases a large lot on which a building is located. The negotiated purchase price is $2,500,000 for the lot and the building. The company pays $71,500 in commissions and taxes. The appraisal values of each items is as follows: Land $650,000, Building $1,750,000, Land Improvements $120,000. What is the appropriate amount to be entered into the general journal for the building?
Student Answer
$1,750,000
$1,784,621
$1,735,000
$1,685,379
Comments:
Question 25. - On September 1, 2010, Drill Far Company purchased a tract of land for $2,300,000. The land is estimated to have a salvage value or $50,000, a useful life of four years, and contain an estimated 4,234,000 tons of iron ore. The company also purchased equipment to use in the extraction process that cost $220,450. The company plans to abandon the equipment when the ore is completely mined. During 2010, the company extracted and sold 1.25 million tons of ore. What is the depletion expense recorded for 2010?
Student Answer:
$575,000
$679,027
$664,250
$562,500
$600,000
Comments: