QUESTION 1 - Which of the following expenditures would not be capitalized as part of the cost of purchasing a piece of equipment?
Transportation costs to get the new equipment to the buyer's factory
Sales tax on the purchase price of the new equipment
The cost to train employees to maintain the new equipment
The cost to install the new equipment
QUESTION 2 - Impairments of plant assets are recorded as a consequence of which accounting principle or assumption?
Matching
Conservatism
Monetary unit
Going concern
QUESTION 3 - On January 1, Smith & Sons purchased a delivery truck for $24,000, having a salvage value of $2,000, and an estimated useful life of 4 years. Calculate the depreciation expense in Year 2 assuming the use of straight-line depreciation.
$5,500
$6,000
$6,500
$6,800
QUESTION 4 - On January 1, Smith & Sons purchased a delivery truck for $24,000, having a salvage value of $2,000, and an estimated useful life of 4 years. Calculate the depreciation expense in Year 2 assuming the use of the double-declining balance method.
$5,500
$6,000
$6,500
$6,800
QUESTION 5 - On January 1, Smith & Sons purchased a delivery truck for $24,000, having a salvage value of $2,000, and an estimated useful life of 100,000 miles. Calculate the depreciation expense for Year 2 assuming the truck is driven 20,000 miles.
$5,500
$6,000
$6,500
$4,400
QUESTION 6 - Which of the following statements is true?
Goodwill is subject to amortization.
Research and development costs should be capitalized to the balance sheet.
Intangible assets are amortized to expense on the income statement.
Goodwill arises because of a company's positive corporate image among its customers.
QUESTION 7 - Which of the following statements is false?
Expenditures for ordinary repairs are a capital expenditure.
Betterment expenditures are a capital expenditure.
Expenditures to acquire low-cost assets are revenue expenditures.
Material additions to a plant asset are capital expenditures.
QUESTION 8 - Accounting for the periodic amortization of intangible assets is similar to which depreciation method?
Double-declining balance depreciation
Straight-line depreciation
Units-of-production depreciation
The periodic amortization of intangible assets is not similar to any depreciation method.
QUESTION 9 - A company reports net income of $8,000, sales revenue of $18,000, and average total assets of $24,000. Calculate the company's return on assets.
44 percent (rounded)
33 percent (rounded)
75 percent (rounded)
There is insufficient information to calculate this ratio.
QUESTION 10 - A company reports net income of $8,000, sales revenue of $18,000, and average total assets of $24,000. Calculate the company's asset turnover.
0.44 (rounded)
0.33 (rounded)
0.75 (rounded)
There is insufficient information to calculate this ratio.