1 hour quiz accounting

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1. If a capital expenditure is treated as a revenue expenditure, then: (Points : 1)

expenses are overstated and owners' equity is understated expenses are overstated and assets are overstated expenses are understated and owners' equity is overstated net income is overstated and owners' equity is understated

Question 2.2. A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400, and $5,850 was paid to remove an old building from which salvaged materials sold for $950. What is the cost basis for the land? (Points : 1)

$90,600 $91,550 $88,150 $87,200

Question 3.3. Which of the following is true with regard to depreciation recorded on the books of a company? (Points : 1)

It represents the periodic transfer of the cost of a fixed asset to expense It represents the wear and tear from use and from the effects of weather It occurs when the asset is no longer able to provide services at the level for which it was intended. It represents the decline in market value of an asset.

Question 4.4. A machine was purchased for $45,000. It has a useful life of 6 years and a residual value of $6,000. Under the straight-line method, what is the annual depreciation expense? (Points : 1)

$7,500 $15,000 $3,750 $6,500

Question 5.5. Which of the following factors are used in computing depreciation expense? Residual Value, Useful Life, Market Value, Initial Cost? (Points : 1)

Yes, Yes, No, Yes Yes, Yes, Yes, Yes Yes, No, No, Yes No, Yes, Yes, No

Question 6.6. A company sold a delivery truck for $18,000 cash. The truck cost $47,500 and had accumulated depreciation of $36,000 as of the date of sale. The sale would include a(n): (Points : 1)

increase in Accumulated Depreciation for $36,000. decrease in Delivery Truck for $11,500 increase in a loss for $6,500 increase in a gain for $6,500

Question 7.7. A company acquired mineral rights for $10,000,000 which are estimated at 80,000 tons. During the year 15,000 tons were extracted and sold. How much depletion should be recorded for the year? (Points : 1)

$5,000,000 $1,875,000 $3,750,000 $2,500,000

Question 8.8. A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 8-year economic life. The amortization would include a(n): (Points : 1)

increase in amortization expense for $33,500. increase in research and development expense for $670,000 decrease in Patent for $83,750 increase in Accumulated Amortization for $670,000

Question 9.9. Fixed assets: (Points : 1)

are shown at their fair market value must be shown on the face of the balance sheet by class of fixed asset. are normally shown under the caption of property, plant and equipment must be shown on the face of the balance sheet by class of fixed asset and are shown at their book value or at their fair market value, whichever is lower.