QUIZ chapter 10 by Ax2YAZF

VIEWS: 26 PAGES: 3

									ANSWERS TO QUIZ (on following pages)

True/False

    1.   True          6. True
    2.   False         7. False
    3.   True          8. True
    4.   True          9. True
    5.   False        10. False


Multiple Choice

    1.   c.
    2.   a.
    3.   a.
    4.   b.
    5.   d.




Instructor’s Manual               Chapter 10 – Capital Assets   10-1
20 MINUTE QUIZ

Circle the correct answer.

True/False

 1.     The cash equivalent price is equal to the fair market           True   False
        value of the asset given up, if it is clearly determinable.
 2.     Cost to construct a building includes the contract price,       True   False
        architect’s fees, building fees, excavation costs but not
        interest costs incurred to finance the project.
 3.     The net book value of an asset equals its cost less             True   False
        accumulated amortization.
  4.    Under the declining-balance method of amortization,             True   False
        an asset may not be amortized below its estimated
        residual value.
  5.    Ordinary repairs are expenditures to increase the               True   False
        operating efficiency, productive capacity, or expected
        useful life of the asset.
  6.    The cost of an addition is debited to the appropriate           True   False
        asset account.
  7.    When the proceeds exceed the net book value of a                True   False
        piece of equipment being sold, the excess is debited to
        Loss on Disposal.
  8.    The useful life of a copyright is generally shorter than        True   False
        its legal life.
  9.    Unlike other assets that can be sold individually in the        True   False
        marketplace, goodwill can be identified only with the
        business as a whole.
10.     Asset turnover is calculated by dividing net income by          True   False
        average total assets.




Instructor’s Manual                       Chapter 10 – Capital Assets                  10-2
Multiple Choice

1. The cost of a factory machine includes all of the following costs except

    a.   invoice price.
    b.   insurance during shipping.
    c.   three year insurance policy on the machine.
    d.   testing and installation cost.

2. On January 1, a machine with a useful life of 5 years and a residual value of $1,000
   was purchased for $20,000. What is the amortization expense in year 2 under the
   double declining-balance method?

    a.   $4,800
    b.   $4,560
    c.   $3,200
    d.   $3,040

3. On June 1, Year 1, a machine costing $45,000 was acquired. The machine is
   expected to produce 90,000 units over a 5-year period, after which it will be
   scrapped. The machine produced 20,000 units during Year 1. Which statement is
   true?

    a.   Using the units-of activity method, amortization expense for Year 1 is $10,000.
    b.   Using the units-of activity method, amortization expense for Year 1 is $5,000.
    c.   Using the straight-line method, amortization expense would be $9,000.
    d.   Using the straight-line method, amortization expense would be $4,500.

4. An asset that cost $20,000 and has accumulated amortization of $15,000 is sold for
   $2,000. The journal entry would include a

    a.   debit to Loss on Disposal of $5,000.
    b.   debit to Loss on Disposal of $3,000.
    c.   credit to Gain on Disposal of $3,000.
    d.   credit to Accumulated Amortization for $15,000.

5. The exclusive right to publish and sell artistic or published work is called a

    a.   patent.
    b.   trademark.
    c.   licence.
    d.   copyright.




Instructor’s Manual                      Chapter 10 – Capital Assets                       10-3

								
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