Accounting Ch. 9

1. 1Corrieten Company purchased equipment and incurred these costs:
   
   Cash Price $24,000
   Sales taxes 1,000
   Insurance during transit 200
   Installation and testing 400
   ----------------------------------------------------------
   
   total cost $25,800
   
   What amount should be recorded as the cost of the equipment?

   1. A$24,000
   2. B$25,200
   3. C$25,400
   4. D$25,800
2. 2Harrington corp. recently leased a number of trucks from Andre Corp. in inspection the books of Harrington corp. you notice that the trucks have not been recorded as assets on its balance sheet. From this, you can conclude that Harrington is accounting for this transaction as a/ an:

   1. AOperating lease
   2. BCapital lease
   3. CPurchase
   4. Dnone of the above
3. 3Depreciation is process of:

   1. AValuation
   2. BCost allocation
   3. Ccash accumulation
   4. DNone of the above
4. 4Cuso company purchased equipment on Jan. 1st 2013 at a total invoice cost of $400,000. The equipment has estimated salvage value of $10,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at Dec. 31, 2014, if the straight line method of depreciation is used?

   1. A$80,000
   2. B$160,000
   3. C$78,000
   4. D$156,000
5. 5A company would minimize it depreciation expense in the first year of owning an asset if it used:

   1. Aa high estimated life, a high salvage value, and declining balance depreciation
   2. Ba low estimated life, a high salvage value and straight line depreciation
   3. Ca high estimated life, a high salvage value and straight line depreciation
   4. Da low estimated life, a low salvage value and declining balance depreciation
6. 6When there is a change in estimated depreciation:

   1. APrevious depreciation should be corrected
   2. BCurrent and future years depreciation should be revised
   3. COnly future years depreciation should be revised
   4. DNone of the above
7. 7Able towing company purchased a tow truck for $60,000 on January 1, 2014. It was originally depreciated on a straight line basis over 10 years with an assumed salvage value of $12,000. On december 31, 2016 before adjusting entries had been made, the company decided to change the remaining estimated life in to 4 years (including 2016) and the salvage value to $2,000. What was the depreciation expense for 2016?

   1. A$6,000
   2. B$4,800
   3. C$15,000
   4. D$12,100
8. 8Additions to plant assets:

   1. ADecrease liabilities
   2. BIncreases a repair expense account
   3. Cincrease a purchases account
   4. Dare capital expenditures
9. 9Bennie Razor company has decided to sell one of its old manufacturing machines on June 30th 2014. The machine was purchased fir $80,000 on January 1st 2010 and was depreciated on a straight line basis for 10 years assuming no salvage value. If the machine was sold for $26,000, what was the amount of the gain or loss recorded at the time of the sale?

   1. A$18,000 loss
   2. B$54,000 loss
   3. C$22,000 gain
   4. D$46,000 gain
10. 10which of the following measures provides an indication of how efficient a company is in employing it assets?

    1. Acurrent ratio
    2. Bprofit margin
    3. Cdebt to assets ratio
    4. Dasset turnover

11. 11Lake Coffee company reported net sales of $180,000 net income of $54,000, beginning total assets of $200,000 and ending total assets of $300,000. What was the companys asset turnover?

    1. A0.90
    2. B0.20
    3. C0.72
    4. D1.39
12. 12Pierce company incurred $150,000 of research and development costs in its labratory to develop a new product. It spent $20,000 in legal fees for a patent granted on January 2, 2014. On july 31, 2014 pierce paid $15,000 for legal fees in a successful

    1. A$150,000
    2. B$35,000
    3. C$185,000
    4. DSome other amount
13. 13Indicate which on of these statements is TRUE

    1. ASince intangible assets lack physical substance they need to disclosed only in the notes to the financial statements
    2. BGoodwill should be reported as a contra account in the stockholders equity section
    3. CTotals of major classes of assets can be shown in the balance sheet, with asset details disclosed in the notes to the financial statements
    4. DIntangible assets are typically combined with the plant assets and inventory and then shown in the property, plant and equipment section
14. 14If a company reports goodwill as an intangible asset on its books, what is the one thing you know with certainty?

    1. AThe company is a valuable company worth investing in
    2. BThe company has a well established brand name
    3. CThe company purchased another company
    4. Dthe goodwill will generate a lot of positivity business for the company for many years to come
15. 15Which of the following statements is FALSE?

    1. AIf an intangible asset has a finite life, it should be amortized
    2. BThe amortization period of an intangible asset can exceed 20 years
    3. CGoodwill is recorded only when business is purchased
    4. DResearch and development costs are expensed when incurred, except when the research and development expenditures in a successful patent
16. 16Kant Enterprise purchased a truck for $11,000 on January 1, 2013. The truck will have estimated salvage value of $1,000 at the end of 5 years. If you use the unit of activity method the balance is accumulated depreciation at December 31 2014 can be computed by the following formula

    1. A($11,000/ total estimated activity) x units of activity for 2014
    2. B($10,000/ total estimated activity) x units of activity for 2014
    3. C($11,000/ total estimated activity) x units of activity for 2014 and 2013
    4. D($10,000/ total estimated activity) x units of activity for 2014 and 2013

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Quiz on Accounting Ch. 9 , created by minisade on 14/12/2015.

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