- Allocating the cost of a natural resource to the units removed is called amortization.
2.Costs incurred to acquire long-lived assets are capital expenditures.
3.Accumulated depreciation, as used in accounting, may be defined as:
- o An expense of doing business.
- o Funds (or cash) set aside to replace the asset being depreciated.
- o portion of the cost of plant asset recognized as expense since asset was acquired.
- o Earnings retained in the business.
4. On January 1, 1999, Ubot Inc. purchased a piece of equipment for $60,000. It is estimated to have an economic life of 5 years and a salvage value of $10,000. The 200% declining-balance method for depreciation is used. What is the book value of the asset at the end of year 2000 ?
- A. o $24,000
- B. o $40,000
- C. o $36,000
- D. o $21,600
- 5.It is not necessary to disclose the maturity dates of long-term obligations on the financial statements.
6.The claims of owners have legal priority over the claims of the creditors.
7 . For a tangible fixed asset, the process of becoming out of date is called obsolescence.
8.The combined cash outlays required for repayment of principal amounts borrowed and for payments of interest expense during the period is called debt service.
9.Current assets / current liabilities =
10 .The present value of expected future earnings of a business in excess of the earnings normally realized in the industry. Recorded when a business entity is purchased at a price in excess of the fair value of its net identifiable assets (excluding goodwill) less liabilities...............
11.Which accounting principle requires that interest expense, or any expense for operations during a specific period, be recorded in that period?
- A. o Materiality principle
- B. o Going-concern principle
- C. o matching principle
- D. o none of the above.
- 12.How are unearned revenues classified on the balance sheet?
- A. Current Asset
- B. Current liability
- C. Long term liability
- D. None of the above
- 13.What will be the result from failing to record the year-end adjustment for depreciation?
- A. An overstatement of income, understatement of owners' equity
- B. An overstatement of income, understatement of assets
- C. An overstatement of income, overstatement of assets
- D. An understatement of income, overstatement of owners' equity
- E. An understatement of income, understatement of owners' equity
- 14.Which of the following is not an example of a current liability as of Dec. 31, 1999?
- A. Management fees collected in advance in 1999, to be earned during 2000.
- B. The portion of long-term debt due in 2000.
- C. The interest due to creditors and bond holders for 2000, to be paid in 2000.
- D. Warranty liability for products carrying a two-year warranty and sold during 1999.
- 15.Goodwill can be estimated and can be reported on the business records any time management feels the business has increased in value.
16.At the time a plant asset is being discarded or sold, it is necessary to update the accumulated depreciation and book value of the plant asset at the date of sale.
17.A convertible bond is a bond that can be converted to cash at any given time.
18.Intangible assets are those assets that are used in the operation of a business but that have no,,,,,,,,,,,,,And are,,,,,,,,,,,,,.
19.Double-declining-balance, 150%-declining balance, and MACRS are all examples of,,,,,,,,,.
20.Interest costs related to the construction of an asset should be charged directly to the Interest Expense account,,,,,,,,.
