ACG3113 EXAM STUDY SET
WITH CORRECT ANSWERS
Which of the following is NOT a major characteristic of a plant asset? - Answer -
acquired for resale
- yields services over a number of years
- possesses physical substance
- acquired for use
- acquired for resale
The cost of land includes all of the following EXCEPT - Answer - the cost of fencing and
lighting
- the cost of leveling and grading
- purchase price
- payments to clear liens
- the cost of fencing and lighting
The cost of a constructed building should include all of the following EXCEPT - Answer -
costs of removing an old building on the new building site
- building permits
- overhead costs incurred
- excavation costs
- costs of removing an old building on the new building site
Which of the following is NOT a capital expenditure with regard to a manufacturing
facility? - Answer - expanding the building by adding a new wing
- replacing the air conditioning system with a similar unit
- painting the exterior of the building
- replacing the heating system with a more efficient model
- painting the exterior of the building
If an asset is sold at a gain, - Answer - the proceeds from the sale are greater than the
asset's cost
, - the book value of the asset is less than the proceeds received from the sale
- the fair value of the asset is greater than the proceeds received from the sale
- the cost of the asset is greater than its book value
- the book value of the asset is less than the proceeds received from the sale
Which of the following is a major characteristic of PP&E? - Answer - they lack physical
substance
- they are acquired for resale
- they are long-term in nature
- they are always subject to depreciation
- they are long-term in nature
Special assessments for local improvements, such as pavements, streetlights, sewers,
and drainage systems, are usually charged to what account? - Answer - betterments
- land
- land improvements
- building improvements
- land
Which of the following costs are capitalized for self-constructed assets? - Answer -
materials and labor only
- materials, labor, and overhead
- materials and overhead only
- labor and overhead only
- materials, labor, and overhead
Which of the following is one of the conditions that must be present for the capitalization
period of interest to begin? - Answer - expenditures for the asset must be budgeted
- activities necessary to get the asset ready for its intended use must be known
- interest costs are being incurred
- the construction period must occur in the current accounting period
- interest costs are being incurred
Losses on exchanged of nonmonetary assets are: - Answer - never recognized
WITH CORRECT ANSWERS
Which of the following is NOT a major characteristic of a plant asset? - Answer -
acquired for resale
- yields services over a number of years
- possesses physical substance
- acquired for use
- acquired for resale
The cost of land includes all of the following EXCEPT - Answer - the cost of fencing and
lighting
- the cost of leveling and grading
- purchase price
- payments to clear liens
- the cost of fencing and lighting
The cost of a constructed building should include all of the following EXCEPT - Answer -
costs of removing an old building on the new building site
- building permits
- overhead costs incurred
- excavation costs
- costs of removing an old building on the new building site
Which of the following is NOT a capital expenditure with regard to a manufacturing
facility? - Answer - expanding the building by adding a new wing
- replacing the air conditioning system with a similar unit
- painting the exterior of the building
- replacing the heating system with a more efficient model
- painting the exterior of the building
If an asset is sold at a gain, - Answer - the proceeds from the sale are greater than the
asset's cost
, - the book value of the asset is less than the proceeds received from the sale
- the fair value of the asset is greater than the proceeds received from the sale
- the cost of the asset is greater than its book value
- the book value of the asset is less than the proceeds received from the sale
Which of the following is a major characteristic of PP&E? - Answer - they lack physical
substance
- they are acquired for resale
- they are long-term in nature
- they are always subject to depreciation
- they are long-term in nature
Special assessments for local improvements, such as pavements, streetlights, sewers,
and drainage systems, are usually charged to what account? - Answer - betterments
- land
- land improvements
- building improvements
- land
Which of the following costs are capitalized for self-constructed assets? - Answer -
materials and labor only
- materials, labor, and overhead
- materials and overhead only
- labor and overhead only
- materials, labor, and overhead
Which of the following is one of the conditions that must be present for the capitalization
period of interest to begin? - Answer - expenditures for the asset must be budgeted
- activities necessary to get the asset ready for its intended use must be known
- interest costs are being incurred
- the construction period must occur in the current accounting period
- interest costs are being incurred
Losses on exchanged of nonmonetary assets are: - Answer - never recognized
