ACCT C101 Financial Accounting Chapter 9 – Flashcards

Which of the following is not a depreciable asset? A. Land improvements B. Land C. Equipment D. Buildings

Which of the following is not a way to express the useful life of a depreciable asset? A. Thirty thousand units B. Ten thousand machine hours C. Five years D. Cost of acquisition

What is depreciation? A. A valuation approach B. An adjustment to market value over time C. A cost allocation method D. A cash accumulation approach

When using the straight-line depreciation method, which of the following is not a factor affecting the computation of depreciation? A. Cost B. Salvage value C. Book value D. Useful life

Which depreciation method calculates annual depreciation expense based on book value at the beginning of each year? A. Units-of-activity B. Declining-balance C. Straight-line D. Salvage method

A permanent decline in the market value of an asset is called A. an impairment. B. a disposal. C. a capital expenditure. D. a write-down.

Which statement is true about additions to plant assets? A. They are capitalized. B. They increase a Repair Expense account. C. They increase the Purchases account. D. They are revenue expenditures.

Which of the following measures provides an indication of how efficient a company is in employing its assets? A. Debt to total assets ratio B. Asset turnover ratio C. Current ratio D. Profit margin ratio

Which of the following statements is false? A. The amortization period of an intangible life can exceed 20 years. B. Goodwill is recorded only when a business is purchased. C. Research and development costs are expensed when incurred, except when the research and development expenditures result in a successful patent. D. If an intangible asset has a finite life, it should be amortized.

A characteristic of a plant asset is that it is A. held for sale in the ordinary course of the business. B. not currently used in the business but held for future use. C. used in the operations of a business. D. intangible.

Which one of the following items is not considered a part of the cost of a truck purchased for business use? A. Freight charges. B. Cost of lettering on side of truck. C. Sales tax. D. Truck license.

The four subdivisions for plant assets are A. intangibles, land, buildings, and equipment. B. property, plant, equipment, and land. C. land, land improvements, buildings, and equipment. D. furnishings and fixtures, land, buildings, and equipment.

The cost of land does not include A. annual property taxes. B. real estate brokers' commission. C. accrued property taxes assumed by the purchaser. D. title fees.

The balance in the Accumulated Depreciation account represents the A. amount to be deducted from the cost of the plant asset to arrive at its fair market value. B. amount charged to expense in the current period. C. cash fund to be used to replace plant assets. D. amount charged to expense since the acquisition of the plant asset.

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n) A. equal and equitable manner. B. accelerated and accurate manner. C. systematic and rational manner. D. conservative market-based manner.

The cost of a long-term asset is expensed A. when it is paid for. B. in the period in which it is acquired. C. in the period in which it is disposed of. D. as the asset benefits the company.

The book value of an asset is equal to the A. replacement cost of the asset. B. blue book value relied on by secondary markets. C. asset's fair value less its historical cost. D. asset's cost less accumulated depreciation.

Recording depreciation each period is necessary in accordance with the A. expense recognition principle. B. going concern principle. C. asset valuation principle. D. historical cost principle.

In computing depreciation, salvage value is A. ignored in all the depreciation methods. B. subtracted from accumulated depreciation to determine the plant asset's depreciable cost. C. an estimate of a plant asset's value at the end of its useful life. D. the fair value of a plant asset on the date of acquisition.

The declining-balance method of depreciation produces a(n) A. decreasing depreciation expense each period. B. declining percentage rate each period. C. constant amount of depreciation expense each period. D. increasing depreciation expense each period.

Which of the following methods will result in the highest depreciation in the first year? A. Straight-line. B. Time valuation. C. Declining-balance. D. Sum-of-year's-digits.

Which of the following methods of computing depreciation is production based? A. Units-of-activity. B. None of these answer choices are correct. C. Straight-line. D. Declining-balance.

Management should select the depreciation method that A. best measures the plant asset's market value over its useful life. B. best measures the plant asset's contribution to revenue over its useful life. C. has been used most often in the past by the company. D. is easiest to apply.

The depreciation method that applies a constant percentage to depreciable cost in calculating depreciation is A. straight-line. B. units-of-activity. C. sum-of-year's-digits. D. None of these answer choices are correct.

When an asset is sold, a gain occurs when the A. sale price exceeds the original cost of the asset sold. B. sale price exceeds the book value of the asset sold. C. book value exceeds the sale price of the asset sold. D. sale price exceeds the depreciable cost of the asset sold.