Accounting Chapter 7

What is the process of accounting for the cost of plant assets?

• Depreciation

• Capitalization

• Amortization

• Liquidation

How can you distinguish a capital expenditure from an immediate expense?

• By its impact on cash flow

• By its effect on long-term assets

• By its immediate tax deduction

• By its short-term liability

What is the method used to account for depreciation on plant assets?

• Straight-line method

• Double-declining balance

• Units of production

• All of the above

What is analyzed to understand the effect of a plant asset disposal?

• Gain or loss on sale

• Depreciation expense

• Cash flow statement

• Inventory turnover

What is the rate of return on assets used to analyze?

• Profitability

• Liquidity

• Solvency

• Market share

Which type of asset is associated with Amortization Expense?

• Plant Assets

• Natural Resources

• Intangible Assets

• Land Improvements

Which of the following assets is associated with Depreciation Expense?

• Land

• Natural Resources

• Intangible Assets

• Buildings, Machinery, and Equipment

What is the cost of any asset according to the working rule for measuring the cost of an asset?

• The purchase price only

• The sum of all costs incurred to bring the asset to its intended use

• The taxes and commissions only

• The market value of the asset

Which of the following is included in land costs?

• Purchase price

• Advertising fees

• Office supplies

• Employee salaries

Which of the following is included in the cost of constructing a building?

• Landscaping fees

• Architectural fees

• Marketing expenses

• Insurance premiums