14_Accounting MCQs

A lump-sum purchase or
basket purchase involves paying a single price for several assets as a group.
True or False
The
double-declining-balance method is an accelerated method of depreciation.
True or False
The gain or loss on the
sale of a plant asset is determined by comparing:
sale value and original cost.
sale value and book value.
sale value and residual value.
book value and residual value.
A company purchased a
computer on July 1, 2015 for $50,000. Estimated useful life of the
computer was 5 years and it has no residual value. Which of the following
methods should be used to best match its expense against the revenue it
produces?
the straight-line method
the first-in, first-out method
the units-of-production method
the double-declining-balance method
When a plant asset is sold for a
price lower than its book value, there will be a gain.
True or False
Which of the following accounting
principles requires businesses to record depreciation?
the matching principle
the going concern principle
the cost principle
the revenue recognition principle
Which of the following is included
in the cost of a plant asset?
amounts paid to make the asset ready
for its intended use
replacement of damaged parts of the
asset
regular repair and maintenance cost
wages of workers who work with the
asset
Iverycoast Inc. purchased a van on
January 1, 2015, for $800,000. Estimated life of the van was 5 years, and
its estimated residual value was $90,000. Iverycoast uses the
straight-line method of depreciation. At the beginning of 2017, the
company revised the total estimated life of the asset from 5 years to 4
years. The estimated residual value remained the same as estimated
earlier. Calculate the depreciation expense for the year 2017.
$250,000
$220,000
$213,000
$145,000
Which of the following is true of
asset turnover ratio?
It measures how efficiently a business uses its sales to finance
the assets.

It measures
how the ending inventory helps in increasing the value of assets.
It measures how efficiently a business uses its net profit to
finance the assets.

It measures how efficiently a business uses its average total
assets to generate sales.
Which of the following is an expense resulting from decline in
the utility of a natural resource?
depletion

amortization
depreciation

obsolescence

Fred owns a delivery truck. Which of the following costs,
associated with the truck, will be treated as a revenue expenditure?
modification for new use

addition to
storage capacity
major engine overhaul

oil change
and lubrication
If a company uses the contra account, Accumulated Amortization,
this account will typically be shown on the balance sheet.
True or False

A company purchased a used machine
for $10,000. The machine required installation costs of $1,000 and
insurance while in transit of $500. At which of the following amounts
would the machine be recorded?
$10,500

$11,000

$10,000

$11,500

Steel Rolling Company purchased a
mine on January 1, 2015, for $500,000 and it is estimated to contain 30,000
tons of iron ore. There is no residual value. The company has
extracted 2,500 tons of ore in 2015 and 3,800 tons of ore in 2016. What
is depletion expense for 2016? (Do not round your intermediate calculations).
$42,667

$63,667

$63,333

$33,333

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