Book Title; Author

Chapter 08 - Multiple choice quiz


1.
A purchase of equipment for $18,000 also involved freight charges of $500 and installation costs of $2,500. The estimated salvage value and useful life are $2,000 and 4 years, respectively. Under the straight-line method, annual depreciation expense will be
A.
$4,750
B.
$4,500
C.
$4,125
D.
$4,625


2.
Kakadu Ltd purchased land for $80,000. The company also paid $12,000 in accrued taxes on the property, incurred $5,000 to remove an old building and received $2,000 from the salvage of the old building. The land will be recorded at
A.
$80,000
B.
$95,000
C.
$92,000
D.
$83,000


3.
A monthly depreciation expense of $600 is recorded on a truck that was purchased for $27,000 and has a $3,000 estimated salvage value. The annual depreciation rate is
A.
25%
B.
27%
C.
30%
D.
33%


4.
Which of the following is not a depreciable asset?
A.
land improvements
B.
equipment
C.
buildings
D.
land


5.
The Nike trademark is an example of a(n)
A.
intangible asset
B.
patent
C.
property asset
D.
natural resource


6.
The depreciable amount is
A.
the cost of a PPE asset plus its residual value
B.
the cost of a PPE asset less its residual value
C.
the process of allocating an expense to an asset
D.
the cost of the PPE less accumulated depreciation.


7.
An asset purchased on 1 January for $48,000 has an estimated salvage value of $3,000. The current year's Depreciation Expense is $5,000 and the balance of the Accumulated Depreciation account, after adjustment, is $20,000. If the company uses the straight-line method, what is the asset's remaining useful life?
A.
9 years
B.
4 years
C.
8 years
D.
5 years


8.
Tangible assets that have physical substance, are used in the operations of the business and are not intended for sale to customers are known as:
A.
SGARA's
B.
Property, plant and equipment
C.
Research and developments costs
D.
Goodwill


9.
The major PPE assets for Qantas would be
A.
trucks and machinery
B.
the 'Flying Kangaroo' logo
C.
fleet of aircraft
D.
cars


10.
Which of the following statements describes the assumption underlying the straight-line method of depreciation?
A.
Depreciation is the same for each year of the asset's useful life
B.
The asset makes a higher contribution when it is new
C.
There is a variable contribution to revenue
D.
The asset's contribution to revenue relates mainly to obsolescence


11.
Which of the following describes the assumption underlying the diminishing balance method of depreciation?
A.
The asset makes the same contribution to revenue in each year of its life
B.
The asset makes a lower contribution to revenue in the earlier years of its life
C.
The asset makes a higher contribution to revenue in the earlier years of its life
D.
None of the above.


12.
For a clothing manufacturer which of he following assets would be likely to be grouped together in an account titled 'Factory, plant and equipment'?
1     sewing machines
2     cutting tables
3     motor vehicles
4     office equipment
5     button holer
A.
1, 2, 3
B.
1, 2, 5
C.
3, 4, 5
D.
2, 3, 4


13.
The depreciation method most commonly used, as disclosed by a survey of the annual reports of listed companies, is:
A.
straight-line
B.
reducing-balance
C.
units-of-use
D.
sum-of-the-digits


14.
Depreciation is classified as a(n):
A.
liability in the statement of financial position
B.
expense in the statement of financial performance
C.
contra asset in the statement of financial position
D.
contra expense in the statement of financial performance


15.
Which of the following statements concerning the units-of-production method of depreciation is untrue?
A.
It charges a greater amount of depreciation in the early years of the asset's life
B.
Accounting periods with greater usage are charged wit a greater amount of depreciation
C.
Kilometers traveled and operating hours are examples of production units
D.
Depreciation is related to use rather than time


16.
The diminishing balance method is also known as the:
A.
depreciation method
B.
ascending method
C.
accelerated method
D.
residual method


17.
The term used to describe the allocation of the cost of an intangible asset to expense is ____________ rather than depreciation.
A.
accumulated depreciation
B.
amortisation
C.
average useful life
D.
recoverable amount


18.
Under the 'non-current assets' on the statement of financial position what item below would not be listed under this category?
A.
retained profits
B.
receivables
C.
intangibles
D.
property, plant and equipment


19.
Calculating the average useful-life is estimated by dividing
A.
the average cost of property, plant and equipment by the depreciation expense
B.
the average cost of property, plant and equipment by the carrying amount
C.
the residual value with the useful life value
D.
the average cost of property, plant and equipment less the carrying amount


20.
The average age of PPE assets is calculated by dividing the
A.
average useful life of the PPE asset by the depreciation expense
B.
accumulated depreciation by depreciation expense
C.
average total sales by net assets
D.
current assets by current liabilities


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