Quiz on Fixed Assets

What are fixed assets?

• Items that a company sells quickly

• Items that a company owns and uses for a long time

• Items that are used up quickly

• Items that are intangible

What is the main reason fixed assets are important in business?

• They are sold quickly

• They provide long-term value

• They are intangible

• They are easily replaceable

What does depreciation mean in accounting?

• Increase in value over time

• Loss of value over time

• Immediate expense of an asset

• Profit generation from an asset

If a $5,000 machine loses $1,000 in value each year, how much is recorded as depreciation each year?

• $1,000

• $5,000

• $500

• $2,000

What is book value in accounting?

• The market value of an asset

• The value of an asset after accounting for depreciation

• The original cost of an asset

• The resale value of an asset

Why is book value important in accounting?

• It determines the market price

• It shows the asset's worth on financial records

• It calculates the resale value

• It predicts future value

If an asset's book value is $8,000 and it originally cost $12,000, what is the accumulated depreciation?

• $4,000

• $8,000

• $12,000

• $20,000

What is the book value if an asset's original cost is $20,000 and it has depreciated by $8,000?

• $12,000

• $8,000

• $20,000

• $28,000

Which depreciation method involves the asset losing the same value every year?

• Declining Balance Method

• Units of Production Method

• Straight-Line Method

• Accelerated Depreciation Method

In which depreciation method does the asset lose more value in the early years?

• Straight-Line Method

• Declining Balance Method

• Units of Production Method

• Sum-of-the-Years-Digits Method