accounting quiz two

1. Which of the following expenditures would NOT be included in the cost of an asset? (Points : 2)

        Freight costs

        Vandalism

        Sales tax

        Surveying fees

Question 2.2. Expenditures that add to the utility of fixed assets for more than one accounting period are (Points : 2)

        committed expenditures.

        revenue expenditures.

        current expenditures.

        capital expenditures.

Question 3.3. Depreciable cost equals (Points : 2)

        cost less accumulated depreciation.

        book value less residual value.

        cost less residual value.

        market value less residual value.

Question 4.4. The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called (Points : 2)

        depletion.

        deferral.

        amortization.

        depreciation.

Question 5.5. To measure depreciation, all of the following must be known EXCEPT (Points : 2)

        market value.

        residual value.

        historical cost.

        estimated life.

Question 6.6. If a fixed asset with an original cost of $18,000 and accumulated depreciation of $12,000 is sold for $15,000, the company must (Points : 2)

        recognize a loss on the income statement under other expenses.

        recognize a loss on the income statement under operating expenses.

        recognize a gain on the income statement under other revenues.

        Gains and losses are not to be recognized upon the sell of fixed assets.

Question 7.7. Goodwill is (Points : 2)

        amortized similar to other intangibles.

        only written down if an impairment in value occurs.

        charged to expense immediately.

        amortized over 40 years or its economic life, whichever is shorter.

Question 8.8. Which of the following intangible assets are amortized over their useful life? (Points : 2)

        Trademarks

        Goodwill

        Patents

        All of the above

Question 9.9. A company purchased an oil well for $25 million with a residual value of $500,000. It is estimated that 10 million barrels can be extracted from the well. Determine depletion expense assuming 3 million barrels are extracted and sold. (Points : 2)

        $7,350,000

        $7,500,000

        $5,000,000

        $7,650,000

Question 10.10. A gain is recorded on the sale of a fixed asset when (Points : 2)

        the asset is sold for a price less than its book value

        the asset is sold for a price more than its book value

        accumulated depreciation on asset is less than its selling price

        accumulated depreciation on asset is more than its selling price