ACG 2071 Chapter 10 Exam Questions with Correct Answers
Question 1:
All of the following will be included in the cost of a fixed asset except
Answer:
mistakes in installation.
Question 2:
If an asset is long lived and is used in a productive manner in a business, it will be classified as
a(n)
Answer:
fixed asset.
Question 3:
Cardinal Industries purchased a generator that cost $11,000. It has an estimated life of five
years and a residual value of $1,000. It is estimated to be good for 5,000 hours. If depreciation
is computed for the first full year using the straight-line method of depreciation, which
information is needed for the calculation?
Answer:
$11,000 cost, five-year life, and $1,000 salvage value
Question 4:
Cardinal Industries purchased a generator that cost $11,000. It has an estimated life of five
years and a residual value of $1,000. It is estimated to be good for 5,000 hours. Compute the
depreciation expense for the first year using the units-of-activity method of depreciation if the
generator was used for 1,040 hours.
Answer:
$2,288
Question 5:
Which of the following is not one of the most common depreciation methods?
Answer:
Sum-of-the-years-digits method
, Question 6:
Which of the following fixed assets is not depreciated?
Answer:
land
Question 7:
A machine was purchased at a cost of $52,000. The equipment had an estimated useful life of
seven years and a residual value of $3,000. Assuming the equipment was sold at the end of
Year 6 for $14,000 cash, which of the following will be included in the journal entry? (Assume
the straight-line depreciation method.)
Answer:
debit to Accumulated Depreciation—Equipment
Question 8:
An asset with a net book value of $1,225 was discarded, having no market value. How much will
be recorded as a loss or gain on disposal?
Answer:
loss of $1,225
Question 9:
when it is fully depreciated.
Answer:
A fixed asset should be removed from the accounts except
Question 10:
Which of the following is not true with regard to selling fixed assets for cash?
Answer:
The cash payment to the buyer is recorded.
Question 11:
Shale Miner Co. acquired mineral rights for $60,000,000. It is estimated that there are 80,000
tons of the resource, and during the current year 10,750 tons were mined and sold. What is the
amount of depletion for the current year?
Answer:
$8,062,500
Question 1:
All of the following will be included in the cost of a fixed asset except
Answer:
mistakes in installation.
Question 2:
If an asset is long lived and is used in a productive manner in a business, it will be classified as
a(n)
Answer:
fixed asset.
Question 3:
Cardinal Industries purchased a generator that cost $11,000. It has an estimated life of five
years and a residual value of $1,000. It is estimated to be good for 5,000 hours. If depreciation
is computed for the first full year using the straight-line method of depreciation, which
information is needed for the calculation?
Answer:
$11,000 cost, five-year life, and $1,000 salvage value
Question 4:
Cardinal Industries purchased a generator that cost $11,000. It has an estimated life of five
years and a residual value of $1,000. It is estimated to be good for 5,000 hours. Compute the
depreciation expense for the first year using the units-of-activity method of depreciation if the
generator was used for 1,040 hours.
Answer:
$2,288
Question 5:
Which of the following is not one of the most common depreciation methods?
Answer:
Sum-of-the-years-digits method
, Question 6:
Which of the following fixed assets is not depreciated?
Answer:
land
Question 7:
A machine was purchased at a cost of $52,000. The equipment had an estimated useful life of
seven years and a residual value of $3,000. Assuming the equipment was sold at the end of
Year 6 for $14,000 cash, which of the following will be included in the journal entry? (Assume
the straight-line depreciation method.)
Answer:
debit to Accumulated Depreciation—Equipment
Question 8:
An asset with a net book value of $1,225 was discarded, having no market value. How much will
be recorded as a loss or gain on disposal?
Answer:
loss of $1,225
Question 9:
when it is fully depreciated.
Answer:
A fixed asset should be removed from the accounts except
Question 10:
Which of the following is not true with regard to selling fixed assets for cash?
Answer:
The cash payment to the buyer is recorded.
Question 11:
Shale Miner Co. acquired mineral rights for $60,000,000. It is estimated that there are 80,000
tons of the resource, and during the current year 10,750 tons were mined and sold. What is the
amount of depletion for the current year?
Answer:
$8,062,500
