Accounting and Depreciation Quiz

Which of the following is a non-current asset with an indefinite useful life?

• Land

• Buildings

• Machinery

• Furniture

What is the formula for calculating the book value of a plant asset?

• Cost - Residual Value

• Cost - Depreciation Expense

• Cost - Accumulated Depreciation

• Residual Value - Depreciation Expense

Which depreciation method allocates an equal amount of expense each year?

• Straight-Line

• Units-of-Production

• Double-Declining-Balance

• Sum-of-the-Years-Digits

What is the purpose of depreciation?

• To set aside funds for asset replacement

• To match the cost of the asset to the revenue it generates

• To calculate market value of the asset

• To reduce tax liabilities

Which of the following is considered an intangible asset?

• Equipment

• Trademark

• Inventory

• Vehicles

What is recorded when the book value of an asset is higher than its recoverable amount?

• Depreciation

• Amortization

• Impairment Loss

• Depletion

Which of the following methods results in higher depreciation expense in the early years of an asset’s life?

• Straight-Line

• Units-of-Production

• Double-Declining-Balance

• Component Depreciation

What is the cumulative amount of depreciation recorded on an asset called?

• Depreciation Expense

• Book Value

• Residual Value

• Accumulated Depreciation

Which of the following is true about goodwill?

• It is amortized annually

• It is tested for impairment annually

• It is a tangible asset

• It has a finite useful life

Which depreciation method uses the formula: (Depreciable Cost ÷ Total Estimated Activity) × Activity for the Period?

• Straight-Line

• Units-of-Production

• Double-Declining-Balance

• Residual Value