Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

31. During periods of rising prices, when the FIFO inventory cost flow method is used, a perpetual inventory system would: a. Not be permitted b.

31. During periods of rising prices, when the FIFO inventory cost flow method is used, a perpetual inventory system would:

a. Not be permitted

b. Result in a higher ending inventory than a periodic inventory system.

c. Result in the same ending inventory as a periodic inventory system.

d. Result in a lower ending inventory than a periodic system.

32. Which of the inventory cost flow assumption provides the best measure of earnings, where best means most appropriate for predicting future earnings, when prices have been declining?

a. FIFO

b. Specific Identification

c. LIFO

d. Average Cost

33. How should the following costs affect a retailers inventory?

Freight-in Interest on an inventory loan

a. Increase No effect

b. Increase Increase

c. No effect Increase

d. No effect No effect

34. According to the net method, which of the following items should be included in the cost of inventory?

Freight-in Purchase Discounts not Taken

a. Yes No

b. Yes Yes

c. No Yes

d. No No

35. Stone Age Company paid the in-transit insurance premium for consignment goods shipped to Hendon Company the Consignee. In addition, Stone Age advanced part of the commissions that will be due when Hendon sells the goods. Should Stone Age include the in-transit insurance premium and the advanced commissions in inventory costs?

Insurance Premiums Advance Commissions

a. Yes Yes

b. No No

c. Yes No

d. No Yes

36. Property, plant and equipment (PPE) does not include:

a. Property not subject to depreciation, such as land used as a factory site.

b. Property subject to depreciation, such as building used for administrative purposes.

c. Property subject to amortization, such as franchise acquired to obtain business rights.

d. Property subject to depletion, such as timber, oil and mining lands and leases.

37. Which of the following items is capitalized as part of the cost of the PPE?

a. Cost of opening a new facility.

b. Cost of relocating or reorganizing an entitys operations

c. Cost of introducing a new product or conducting business in a new location.

d. Cost directly attributable to bringing the PPE to the intended location and condition.

38. Which of the following items in not capitalized as part of the cost of the PPE?

a. Professional fees

b. Initial operating losses

c. Cost of site preparation and testing

d. Initial estimate of the cost of dismantling and removing the PPE

39. Which of the following items is not chargeable to the Land account?

a. Cost of survey by engineers

b. Expenditures for fence, water system, sidewalk and pavement

c. Brokers commission and fees for registration and title transfer

d. Attorneys fee and any other expenditures for establishing clean title

40. The following charges are generally capitalized to the Land account, except:

a. Cost of option of the land not acquired

b. Payments to tenants to induce them to vacate the premises

c. Buyer-assumed mortgages and encumbrances like property taxes

d. Special assessment for local improvements which benefit the property.

41. A land acquired had an unwanted building that should be demolished. Assuming a salvage value can be recovered from the demolition of the building, the land account should be charged with the:

a. Salvage value

b. Cost of demolition

c. Cost of demolition plus salvage value

d. Cost of demolition minus salvage value

42. Which of the following is not chargeable to the Machinery and Equipment account?

a. Freight and installation costs

b. Material, labor and other expenditures incurred in placing the equipment ready for use

c. Testing costs of the equipment or facilities before they are ready for productive use

d. Repair cost incurred when equipment is damaged in the process of installation

43. When a group of asset is acquired for a lump sum price, the total cost should be allocated to the individual assets based on their relative:

a. Fair value

b. Book value

c. Assessed value

d. Appraised value

44. The cost of property acquired on credit with available cash discount is equal to:

a. Invoice price plus cash discount whether taken or not.

b. Invoice price minus cash discount whether taken or not.

c. Invoice price plus cash discount only when taken.

d. Invoice price minus cash discount only when taken.

45. The cost of property acquired by installment is equal to:

a. Cash purchase price

b. Invoice price

c. Installment price

d. List price

46. Property acquired through the issuance of securities (bonds or shares) of a closely held corporation should be recorded at:

a. Fair value of the property acquired

b. Fair value of the securities issued

c. Fair value of the property acquired or fair value of the securities issued, whichever is lower

d. Fair value of the property acquired or fair value of the securities issued, whichever is higher

47. Property acquired in exchange for a non-monetary asset and the exchange lacks commercial substance, the cost of the asset acquired is measured at:

a. Fair value of the asset given

b. Fair value of the asset received

c. Carrying amount of the asset given

d. Carrying amount of the asset received

48. The cost of a self-constructed property, plant and equipment does not include:

a. Direct costs of materials and labor

b. Indirect costs and overhead specifically identifiable or traceable to the construction

c. Abnormal amount of wasted material, labor or overhead incurred in the construction

d. Financing costs attributable to the construction incurred up to the completion of construction

49. The carrying amount of the property is increased as a result of revaluation. Assuming no revaluation was made before, the increase should be credited to:

a. Accumulate depreciation

b. Revaluation gain, shown as a component of income

c. Revaluation surplus, shown as a component of equity

d. Retained earnings, shown under equity portion of the balance sheet

50. The carrying amount of the property is decreased as a result of revaluation. Assuming no revaluation was made before, the decrease should be debited to:

a. Accumulated depreciation

b. Impairment loss

c. Revaluation surplus, shown as a component of equity

d. Retained earnings, shown under equity section of the balance sheet.

51. A revaluation increase shall be recognized as income:

a. Always

b. When the asset is revalued for the first time

c. When the asset is revalued frequently than usual

d. When it reverses a revaluation decrease of the same asset previously recognized as an expense

52. If a revalued property is sold, the related revaluation surplus is transferred directly to:

a. Revaluation gain

b. Retained earnings

c. Additional paid-in capital

d. Accumulated depreciation

53. Major spare parts and standby equipment that are expected to be used over a period of more than one year should be classified as:

a. Property, plant and equipment

b. Inventory

c. Non-current asset

d. Expense

54. Property, plant and equipment acquired by way of donation are usually recorded at:

a. Recorded value of the asset

b. Fair value of the donated asset

c. Nil amount- memorandum entry is necessary

d. Appraised value as determined by the board of directors

55. What is depreciation?

a. It is a process of asset valuation for balance sheet purposes.

b. It applies only to long-lived intangible assets.

c. It is used to indicate decline in the market value of long-lived assets.

d. It is an accounting process which systematically allocates long-lived asset costs to accounting periods.

56. Periodic depreciation expense primarily is the result of applying the:

a. Revenue principle

b. Full-disclosure principle

c. Cost principle

d. Matching principle

57. Depreciation is best described as a method of:

a. Cost allocation

b. Asset valuation

c. Current value allocation

d. Useful life determination

58. It is related to a depreciable assets deterioration over a period due to use or non-use.

a. Physical depreciation

b. Psychological depreciation

c. Mental deterioration

d. Functional depreciation

59. It arises from obsolescence or inadequacy of the asset to perform efficiently.

a. Physical depreciation

b. Psychological depreciation

c. Mental deterioration

d. Functional depreciation

60. Depreciation measurement should be based on:

a. Past input exchange price

b. Current input exchange price

c. Future input exchange price

d. Current output exchange price

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISO 27001 Controls A Guide To Implementing And Auditing

Authors: IT Governance

1st Edition

1787781445, 978-1787781443

More Books

Students also viewed these Accounting questions

Question

31, On for wages ($7.20o, payroll Journal entry worksheet te

Answered: 1 week ago