Accounting 201Chapter 07 Practice Test Flashcards Preview

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Flashcards in Accounting 201Chapter 07 Practice Test Deck (10):
1

Which of the following correctly describes the nature of depreciation? A) Depreciation represents the valuation of property, plant, and equipment over its service life. B) Depreciation represents the valuation of an intangible asset over its service life. C) Depreciation represents the allocation of the cost of property, plant, and equipment over its service life. D) Depreciation represents the allocation of the cost of an intangible asset over its service life.

C

2

Which of the following expenditures should be recorded as an asset? A) Interest during the construction period of a new building. B) Repair of a machine. C) Property taxes incurred on an existing building. D) Depreciation during the first year of an existing building.

A

3

Which of the following depreciation methods typically results in the highest depreciation expense during the first year of an asset's life? A) Straight-line method. B) Activity-based method. C) Double declining balance method. D) Each method will result in the same depreciation during the first year.

A

4

Weiss Company purchased a new machine and incurred the following costs: Cost of Machine $50000Sales Tax 8% $4,000Shipping $3000Installation $2000Depriciation During First Month $1000What is the total recorded cost of the new machine?A) $60,000. B) $59,000. C) $57,000. D) $50,000.

B

5

Accumulated depreciation is A) An expense account. B) An asset. C) A contra-asset. D) A liability.

C

6

The original cost of a piece of equipment was $100,000. The equipment was depreciated using the straight-line method with annual depreciation of $20,000. After two years, the fair value of the equipment is $82,000. How much is the book value of the equipment at the end of the second year? A) $100,000. B) $82,000. C) $80,000. D) $60,000.

D

7

Which of the following is properly recorded as an intangible asset? A) An internally developed trademark. B) A piece of land. C) A purchased patent. D) An internally developed copyright.

C

8

Over the entire service life of an asset, which depreciation method records the highest total depreciation? A) The straight-line method. B) The double declining method. C) The activity-based method. D) All the methods result in the same total depreciation.

D

9

Equipment originally costing $100,000 has accumulated depreciation of $65,000. If it is sold for $30,000, the company should record: A) A loss of $5,000. B) A gain of $5,000. C) A loss of $70,000. D) A gain of $70,000.

A

10

If equipment is retired, which of the following accounts would be debited? A) Accumulated depreciation. B) Depreciation expense. C) Equipment. D) Cash.

A