ACCT 2110 Ch 7 - Overall

What are operating assets used for in a company?

• They are sold to customers.

• They are used in the normal course of operations to generate revenue.

• They are used for short-term investments.

• They are used for employee benefits.

How are operating assets recorded at acquisition?

• At their market value.

• At their replacement cost.

• At their historical cost.

• At their depreciated value.

Which of the following is NOT a category of operating assets?

• Property, plant, and equipment

• Intangible assets

• Natural resources

• Inventory

Which of the following is an example of a tangible operating asset?

• Patent

• Trademark

• Land

• Goodwill

What is the term used for the reduction in value of natural resources over time?

• Depreciation

• Amortization

• Depletion

• Expensing

What are land improvements classified as?

• Intangible assets

• Natural resources

• Property, plant, and equipment

• Inventory

Which of the following assets is not subject to depreciation?

• Land

• Buildings

• Equipment

• Furniture

What is included in the cost of acquiring land?

• Purchase price, sales taxes, installation costs

• Purchase price, real estate commissions, delinquent property taxes

• Purchase price, closing costs, architectural fees

• Purchase price, insurance during transportation, cost of trial runs

What is the process of allocating the cost of a tangible fixed asset over its useful life called?

• Amortization

• Depreciation

• Depletion

• Accumulation

What is the journal entry to record depreciation expense?

• Debit Depreciation Expense, Credit Accumulated Depreciation

• Debit Accumulated Depreciation, Credit Depreciation Expense

• Debit Depreciation Expense, Credit Cash

• Debit Cash, Credit Depreciation Expense