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FA chapter 7 quiz

meli ssa 13 questions

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Questions in this quiz (13)

  1. 1A capital expenditure
    1. Ais expensed immediately
    2. Badds to an asset.
    3. Crecords additional capital.
    4. Dis a credit like capital (owners’ equity)
  2. 2Q7-48. Which of the following items should be accounted for as a capital expenditure?
    1. ACosts incurred to repair leaks in the building roof.
    2. BMaintenance fees paid with funds provided by the company’s capital.
    3. CTaxes paid in conjunction with the purchase of office equipment.
    4. DThe monthly rental cost of an office building.
  3. 3Suppose you buy land for $3,200,000 and spend $1,300,000 to develop the property.
    You then divide the land into lots as follows:

    How much did each hilltop lot cost you?    Image for question 3
    1. A$270,000
    2. B$192,000
    3. C$128,000
    4. D. $180,000
  4. 4Which statement about depreciation is false?
    1. AObsolescence as well as physical wear and tear should be considered when determining
      the period over which an asset should be depreciated.
    2. BDepreciation is a process of allocating the cost of an asset to expense over its useful life.
    3. C. A major objective of depreciation accounting is to match the cost of using an asset with
      the revenues it helps to generate.
    4. DDepreciation should not be recorded in years that the market value of the asset has
      increased.
  5. 5Cleveland Corporation acquired a machine for $42,000 and has recorded depreciation
    for two years using the straight-line method over a five-year life and $7,000 residual value. At
    the start of the third year of use, Cleveland revised the estimated useful life to a total of 10
    years. Estimated residual value declined to $0.

    What is the book value of the machine at the end of two full years of use?
    1. A$21,000
    2. B. $22,000
    3. C$14,000
    4. D$28,000
  6. 6Cleveland Corporation acquired a machine for $42,000 and has recorded depreciation
    for two years using the straight-line method over a five-year life and $7,000 residual value. At
    the start of the third year of use, Cleveland revised the estimated useful life to a total of 10
    years. Estimated residual value declined to $0.
    How much depreciation should Cleveland record in each of the asset’s last eight years (that
    is, year 3 through year 10), following the revision?
    1. A$9,333
    2. B$2,800
    3. C$3,500
    4. DSome other amount
  7. 7King Company failed to record depreciation of equipment. How does this omission
    affect King’s financial statements?
    1. ANet income is understated, and assets are overstated
    2. BNet income is overstated, and assets are understated
    3. CNet income is understated, and assets are understated.
    4. D. Net income is overstated, and assets are overstated.
  8. 8. Jimmy’s DVD, Inc., uses the double-declining-balance method for depreciation on its
    computers. Which item is not needed to compute depreciation for the first year?
    1. AOriginal cost
    2. BEstimated residual value
    3. CExpected useful life in years
    4. DAll the above are needed.
  9. 9Which of the following costs is reported on a company’s Income Statement?
    1. AAccumulated depreciation
    2. BLand
    3. CAccounts payable
    4. DDepreciation expense
  10. 10Which of the following items is reported on the Balance Sheet?
    1. AAccumulated depreciation
    2. BGain on disposal of equipment
    3. CCost of goods sold
    4. DNet sales revenue

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Description
Quiz on FA chapter 7 quiz, created by meli ssa on 19/02/2019.
Author
meli ssa
Language
English
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