Accounting MCQs

QUESTION

Question 1.1.The term applied to the periodic transfer of a plant asset’s cost to expense is_______. (Points : 1) amortization depreciation depletion capitalizationQuestion 2.2.A characteristic of a plant asset is that it_______. (Points : 1) is used in the production of income for a business is available for resale to customers in the ordinary course of business lacks physical form both a and b are correctQuestion 3.3.Erosion Tech manufactures erosion control products. In 20X5, they purchased a straw mat machine from Germany. They had the following costs associated with the machine: Price of straw mat machine$450,000Discounts received$9000Travel cost from German to the U.S.$40,000Insurance on equipment while en route$3,000Insurance on equipment while in operation$2,000Installation costs$20,000Property taxes assessed on machine during the second year of operation$4120 What amount should be recorded as the capitalized cost of the equipment? (Points : 1) $504,000 $493,000 $510,120 $495,000Question 4.4.Which of the following accounting methods is the method used to compute depletion? (Points : 1) Straight-line Declining-balance Units-of-production capitalizationQuestion 5.5.When the amount of use of a plant asset varies from year to year, the method of determining depreciation that matches revenues and expenses would be the_______. (Points : 1) straight-line method double-declining balance method units-of-production method either straight-line method or the double-declining balance methodQuestion 6.6.Accumulated depreciation_______. (Points : 1) is a contra liability account is an expense account is a contra asset account is a contra equity accountQuestion 7.7.The double-declining-balance method will provide the greatest tax advantage during the first year of an asset’s life because it yields the ________ compared to the use of other depreciation methods. (Points : 1) highest net income lowest net income highest gross profit lowest operating expensesQuestion 8.8.To measure depreciation for a plant asset, all of the following must be known except_______. (Points : 1) estimated useful life historical cost current market value estimated residual value

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