Accounting exam 2

When a firm buys land on which there is a building, and the building is torn down so that an appropriate new building can be constructed on the land:

• the total cost of the land and demolishing the old building are capitalized as land cost.

• the cost assigned to the land includes the original cost of the old building.

• any of the purchase cost allocated to the old building is capitalized as part of the cost of the new building.

• any of the purchase cost allocated to the old building is reported as a loss.

Which of the following statements best describes the process of accounting for depreciation?

• A process that attempts to recognize loss in market value over a period of time.

• A process for recognizing all of the cost associated with repairing and maintaining an asset.

• A process for recognizing the cost of an asset that should be matched against revenue earned as a result of using the asset.

• A process for setting aside cash so funds will be available to replace the asset.

The net book value of a depreciable asset is:

• the difference between the asset's cost and the current year depreciation expense.

•  

  the fair market value of the asset.

• the difference between the asset's cost and accumulated depreciation.

• the amount for which the asset should be insured.

Noncurrent, intangible assets such as leasehold improvements, patents, and copyrights are all subject to:

• consolidation.

• depreciation.

• depletion.

• amortization.

When a depreciable asset is sold:

• depreciation expense is adjusted so there is no gain or loss.

• a gain arises if the sales proceeds exceed the net book value.

• a loss arises if the sales proceeds exceed the net book value.

• any cash received results in a gain.

One inventory cost flow assumption will result in a different amount of Cost of Goods Sold from another cost flow assumption only if:

• the cost of inventory items do not change during the year.

• the cost of inventory items changes during the year

• a new product is added to inventory.

• inventory quantities change from the beginning of the year to the end of the year.

Which of the following is NOT an example of an inventory account a manufacturing firm might use?

• Finished goods inventory

• Work in process inventory

• Merchandise inventory

• Raw materials inventory

In which depreciation method would the depreciation expense be the same every year?

• Straight line

• Units of production

Which of the following is an example of an Intangible Asset? (SELECT ALL THAT APPLY)

• Equipment used to build products for sale

• Patent

• Trademarks and trade names

• Copyrights

Which of the following are attributes of Goodwill? (SELECT ALL THAT APPLY)

• Occurs when one company buys another

• Donations of excess equipment to another company

• Occurs when the purchase proce exceeds the fair market value of the assets acquired

• Only "purchased" goodwill is an intangible asset