1. A capital expenditure would appear on the (Points : 2)

income statement under operating expenses. balance sheet under fixed assets. balance sheet under current assets. income statement under other expenses.

2. Salvage value has a similar meaning as (Points : 2)

residual value. scrap value. book value. both residual value and scrap value.

3. Expenditures for research and development are generally recorded as (Points : 2)

current operating expenses. assets and amortized over their estimated useful life. assets and amortized over 40 years. current assets.

4. Which of the following expenditures would NOT be included in the cost of an asset? (Points : 2)

Freight costs Vandalism Sales tax Surveying fees

5. Goodwill is (Points : 2)

amortized similar to other intangibles. only written down if an impairment in value occurs. charged to expense immediately. amortized over 40 years or its economic life, whichever is shorter.

6. Fixed assets are ordinarily presented in the balance sheet (Points : 2)

at current market values. at replacement costs. at cost less accumulated depreciation. in a separate section along with intangible assets.

7. Expenditures that add to the utility of fixed assets for more than one accounting period are (Points : 2)

committed expenditures. revenue expenditures. current expenditures. capital expenditures.

8. A company purchased an oil well for $25 million with a residual value of $500,000. It is estimated that 10 million barrels can be extracted from the well. Determine depletion expense assuming 3 million barrels are extracted and sold. (Points : 2)

$7,350,000 $7,500,000 $5,000,000 $7,650,000

9. A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400, and $5,850 was paid to remove an old building from which salvaged materials sold for $1,950. What is the cost basis for the land? (Points : 2)

$93,500 $91,550 $85,700 $89,600

10. If a capital expenditure is treated as a revenue expenditure, then (Points : 2)

expenses are overstated and owners' equity is understated. expenses are overstated and assets are overstated. expenses are understated and owners' equity is overstated. net income is overstated and owners' equity is understated.