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This assessment is worth 100 points.

  1. It is not necessary to report both the cost and the accumulated depreciation of plant assets on the balance sheet.   (5 points)

      
      

  2. Accumulated depreciation represents funds set aside to buy new assets when the assets currently owned are replaced.   (5 points)

      
      

  3. Asset turnover is computed by dividing average total assets by cost of sales.   (5 points)

      
      

  4. Capital intensive companies have a relatively large amount invested in plant assets to generate a given level of sales.   (5 points)

      
      

  5. An assets cost includes all normal and reasonable expenditures necessary to get an asset in place and ready for its intended use.   (5 points)

      
      

  6. The most frequently used method of depreciation is the straight-line method.   (5 points)

      
      

  7. The double-declining balance method is applied by (1) computing the asset's straight-line depreciation rate, (2) doubling it, (3) subtracting salvage value from cost, and (4) multiplying the rate times the net value.   (5 points)

      
      

  8. The first step in accounting for an asset disposal is to calculate the gain or loss on disposal.   (5 points)

      
      

  9. The historical cost principle requires that an asset be recorded at the cash or cash equivalent amount given in exchange for it.   (5 points)

      
      

  10. Amortization is the process of allocating the cost of natural resources to periods when they are consumed.   (5 points)

      
      

  11. Depreciation:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  12. A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  13. Coors had gross sales of $2,590 million and net sales of $2,463 million. Its average total assets for the period were $1,546 million. Coors' total asset turnover equals:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  14. A company purchased property for $100,000. The property included a building, parking lot, and land. The building was appraised at $62,000; the land at $45,000, and the parking lot at $18,000. The value of the land to be recorded in the accounting records is:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  15. A method that allocates an equal portion of the total depreciable cost for a plant asset to each accounting period during its useful life is called:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  16. A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  17. Ordinary repairs:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  18. An asset can be disposed of by:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  19. A company had a bulldozer destroyed by fire. The bulldozer originally cost $38,000. The accumulated depreciation on it was $20,000. The proceeds from the insurance company were $20,000. The company should recognize:   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  

  20. A company purchased a machine valued at $26,000. It traded in an old (similar) machine for a $8,200 trade-in allowance-meaning the company paid $17,800 cash with the trade-in. The old machine cost $24,000 and had accumulated depreciation of $16,000. What is the recorded value of the new machine?   (5 points)

    a.  
    b.  
    c.  
    d.  
    e.  



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