1. ____ Tony and Tom formed a partnership, with Tony investing $60,000 and Tom investing $40,000. There was no partnership agreement. The net income should be shared: a. 60:40 b. 40:60 c. give all net income to Tony d. equally

2. ____ Robert purchased a truck for $22,000; the salvage value was estimated to be $2,000. The truck is expected to be driven for 100,000 miles. In year one, it was driven 18,000 miles. The depreciation under Units of Activity would be: a. $3,600 b. $3,960 c. $1,800 d. $1,080

3. ____ To capitalize a cost means a. to debit an asset account b. to depreciate an asset c. to omit the cost from consideration d. to debit an expense account

4. ____ On October 1, 2012, Bernie purchases Equipment with cost of $28,000, salvage value of $4,000 and life of 6 years. Under straight line depreciation, Bernie will record how much depreciation expense on 12/31/12? A. $4,000 b. $4,667 c. $1,000 d. $8,000

5. ____ Reggie purchases equipment for $40,000 and pays his lawyer $500 to advise him in the purchase. The $500 would be debited to: a. Legal Expense b. Miscellaneous Expense c. Equipment d. None of these

6. ____ Ward Inc. owns Equipment with cost of $30,000 and accumulated depreciation of $19,000. The Equipment is sold for $8,000 cash. Which of the following is true? a. Gain on Disposal will be debited for $3,000 b. Loss on Disposal will be credited for $1,000 c. Loss on Disposal will be debited for $3,000 d. Gain on Disposal will be credited for $3,000.

7. ____ Lemming acquired a building for $60,000 that is estimated to last for 20 years. Lemming depreciates the building on a straight line basis, with no salvage value. The book value of the building after 4 years will be: a. $48,000 b. $55,000 c. $45,000 d. the same as the market value of the building

8. ____ Who pays unemployment taxes? A. employee only b. employer and employee c. neither employer nor employee d. employer only

9. ____ A newly appointed payroll manager should obtain a copy of: a. Learning Payroll by Trial and Error b. IRS Publication 15 Circular E c. The Seattle Central Fall Course Schedule d. Payrollan Exciting Career Choice for the 1970s

10. ____ Nell uses double declining balance depreciation. How much depreciation should Nell record in year one on Equipment with a cost of $8,000, salvage value of $1,000 and life of 5 years? A. $1,600 b. $3,200 c. $1,800 d. $3,600

11. ____ The depreciable cost of an asset is equal to the cost minusa. the accumulated depreciation b. the salvage value c. the straight line rate d. the DDB rate

12. ____ Johnson purchases a piece of equipment with an estimated useful life of 8 years. The DDB rate for this asset would bea. 8% b. .125 c. .25 d. .50

13. ____ On which financial statement would Accumulated Depreciation--Equipment be reported? A. Balance Sheet b. Income Statement c. Owners Equity Statement d. None of these

14. ____ Name an accelerated depreciation method that is used ONLY for tax purposes: a. SL b. Units of Activity c. MACRS d. all of these are accelerated methods for tax purposes

15. ____ Marley and Scrooge go into business together as partners in a partnership. Scrooge contributes land and equipment. These contributed assets should be valued at: a. original cost paid by Scrooge b. book value as they were recorded on Scrooges books c. current fair market value, with approval of Marley d. none of these

Bobby purchases equipment with cost of $60,000, salvage value of $4,000 and life of 4 years. Create a STRAIGHT LINE DEPRECIATION SCHEDULE.

Year	Depr. Cost	Rate	Depr. Expense	Acc. Depr.	Book Value
1
2
3
4

Use the same cost, SV and life for a depreciation schedule using the DOUBLE DECLINING BALANCE method. Cost=$60,000, SV= $4,000, Life=4 years.

Year	BV Beg. of Yr.	Rate	Depr. Expense	Acc. Depr.	Book Value, End of Year
1
2
3
4

Present Value Concepts-- Fill in the table with the correct values. Show your formulas.

PV of $1		PV of Annuity of $1
Periods 11%		Periods 11%
1		1
2		2
3		3

Future Value Problem Roni invests $7,000 today in a project that earns 8% per year. How much will Ronis investment grow to in 4 years? Show your formula. _________________________

Present Value of a Stream of Unequal Cash Flows Fred is looking at a project with the following cash flows:

0	1	2	3
	$10,000	$15,000	$20,000
PV = $_________

Can you calculate the present value of this stream of unequal cash flows, using a discount rate of 10%? OK to use a present value table for this one. Show your formula.