ACCT 2110 Ch 7 - Slides 1-15

What are operating assets used for in a company?

• To be sold to customers

• To generate revenue in the normal course of operations

• To be transferred to other companies

• To be used as short-term investments

How are operating assets recorded at acquisition?

• At their market value

• At their cost (historical cost)

• At their depreciated value

• At their future value

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

• Property, plant, and equipment

• Intangible assets

• Natural resources

• Inventory

How are property, plant, and equipment treated over their useful life?

• They are amortized

• They are depleted

• They are depreciated

• They are expensed immediately

Which of the following is an example of an intangible operating asset?

• Land

• Buildings

• Patents

• Equipment

What is the treatment for natural resources over their useful life?

• They are depreciated

• They are amortized

• They are depleted

• They are expensed immediately

Which of the following is NOT an example of property, plant, and equipment?

• Land

• Goodwill

• Buildings

• Land improvements

Which of the following assets is not subject to depreciation?

• Land

• Buildings

• Equipment

• Machinery

What is included in the cost of acquiring land?

• Purchase price, real estate commissions, delinquent property taxes, closing costs

• Purchase price, sales taxes, installation costs

• Purchase price, closing costs, architectural fees

• Purchase price, sales taxes, transportation costs

What is the journal entry to record the purchase of a fixed asset?

• Debit Fixed Asset, Credit Cash or Accounts Payable

• Debit Cash, Credit Fixed Asset

• Debit Depreciation Expense, Credit Accumulated Depreciation

• Debit Accumulated Depreciation, Credit Depreciation Expense