Review 3

An asset whose life will extend over more than one accounting period is called a

• liability

• current asset

• non current asset

• non current liability

Furniture, motor vehicles, land and machinery are examples of what type of assets?

• financial

• property, plant and equipment

• other

• intangibles

Bonds, debentures and shares are examples of which type of assets?

• financial

• property, plant and equipment

• other

• intangible

The using of physical quantities of natural resources would be referred to as:

• depreciation

• amortisation

• depletion

• cost allocation

d Using the straight line method of depreciation, the depreciation for the first year for a motor vehicle that cost $13 750 (including GST), with an estimated life of four years and a residual value of $4000, would be: i $

• $2125

• $2437.50

• $3125

• $3437.50

The balance of the Accumulated Depreciation account represents:

• a non-current liability

• a cash fund accumulated to replace worn-out or obsolete non-current assets

• an expired cost of the non-current assets purchased in previous accounting periods

• an operating expense of the business.

Using the straight line method of depreciation, the depreciation allowed for the year on machinery that cost $44 000 (including GST) and was installed at a cost of $5500 (including GST), with an estimated life of five years and a residual value of $2000, would be:

• $7600

• $8600

• $9000

• $7000

Using the diminishing balance method of depreciation, the depreciation for the year on a piece of office equipment that cost $16 500 (including GST), with an estimated residual value of $1000 and a depreciation rate of 20 per cent, would be:

• $2800

• $3000

• $2400

• $2440

The amount invested by the proprietor in a business is called

• Capital

• Cash

• Revenues

• Loan

Sale is recognised as a revenue

• When the contract for sale is entered into

• At the point of sale

• After the expiry of credit period allowed to debtors

• After the money collected from the customer