Many companies use accelerated depreciation for tax purposes because: Answer it is easier to calculate than straight-line depreciation. it reflects the amount of cash used in depreciation. it results in lower taxable income than straight-line depreciation. it is used for determining net income reported to stockholders. The principal challenge to calculating depletion is estimating: Answer the cost of the asset. the salvage value of the exploration equipment. the demand for the product. the quantity of material to be recovered. 1 points Question 3 Which of the following is not a term that describes part of the accounting for long-lived assets? Answer Accumulation. Depletion. Amortization. Depreciation. 1 points Question 4 If an organization has an obligation to pay $5,000 to a supplier two years from now, the present value of the obligation: Answer is less than $5,000. is $5,000. is more than $5,000. could be calculated using an annuity factor from the present value tables. 1 points Question 5 A particular common stock has an annual cash dividend of $2.00 per share and is predicted to have a market value of $30 per share 5 years from now. Assuming a discount rate of 10%, a fair market price for the stock today is: Answer $20.00 $26.21 $37.58 $56.21 1 points Question 6 The present value of an obligation of $4,000 payable in 7 years at 8% is: Answer $1,760 $2,334 $3,206 $3,680 1 points Question 7 When a machine having a net book value of $5,000 is sold for $4,000: Answer current assets increase, equipment (net) increases, and net income increases. current assets increase, equipment (net) decreases, and net income increases. current assets increase, equipment (net) decreases, and net income decreases. current assets increase, equipment (net) increases, and net income decreases. 1 points Question 8 The present value of $3,000 to be received every year for 9 years, at 10%, is: Answer $7,073.80 $12,273.00 $17,277.00 $27,000.00 1 points Question 9 The net book value of a depreciable asset is: Answer the fair market value of the asset. the amount for which the asset should be insured. the difference between the asset's cost and accumulated depreciation. the difference between the asset's cost and depreciation expense. 1 points Question 10 The Modified Accelerated Cost Recovery System (MACRS) specifies which of the following depreciation methods for buildings? Answer 150% declining-balance. Double-declining-balance. Straight line. Buildings are not depreciable assets. 1 points Question 11 Which of the following statements best describes the process of accounting for depreciation? Answer A process that attempts to recognize loss in economic value over a period of time. A process for setting aside cash so funds will be available to replace the asset. A process for recognizing the cost of an asset that should be matched against revenue earned as a result of using the asset. A process for recognizing all of the cost associated with using an asset in a revenue generating activity. 1 points Question 12 The entry to record depreciation expense: Answer increases a contra long-term asset and decreases net income. decreases a contra long-term asset and decreases net income. decreases working capital and decreases net income. decreases a long-term asset and increases a contra long-term asset. 1 points Which of the following could be a correct journal entry to record the disposition of equipment? A) B) C) D) Answer Option A Option B Option C Option D 1 points Question 14 The intangible asset "goodwill:" Answer represents the management team's assessment of its value to the company. may arise when one company purchases another company. arises because the market value of a company's assets is greater than cost. all of the above are correct. 1 points Question 15 The Modified Accelerated Cost Recovery System (MACRS) specifies which of the following depreciation methods for land? Answer 150% declining-balance. Double-declining-balance. Straight line. Land is not a depreciable asset. 1 points Question 16 The present value concept is widely applied in business because: Answer inflation erodes the purchasing power of money. money has value over time. accounting for operating leases requires its use. most obligations are settled within a year. 1 points Question 17 Moped, Inc. purchased machinery at a cost of $22,000 on January 1, 2011. The expected useful life is 5 years and the asset is expected to have salvage value of $2,000. Moped depreciates its assets via the double-declining balance method. What is the firm's gain or loss if the machinery is sold for $11,000 on December 31, 2012? Answer Gain of $4,000 Gain of $3,080 Loss of $600 Loss of $4,000 1 points Question 18 When a depreciable asset is sold: Answer a gain arises if the sales proceeds exceed the net book value. a loss arises if the sales proceeds exceed the net book value. any cash received results in a gain. depreciation expense is adjusted so there is no gain or loss. 1 points Question 19 Expenditures capitalized as long-lived assets generally include those expenditures that: Answer are made for normal repairs to maintain the usefulness of the asset over a number of years. are for items that have a physical life of more than a year, regardless of their cost. are material and that have an economic benefit to the entity only in the current year. are material and that have an economic benefit to the entity that extends beyond the current year. 1 points Question 20 Depreciation, in accounting, is a process that results in: Answer depreciable assets being reported in the balance sheet at their fair market value. accumulating cash for the replacement of the asset. an accurate measurement of the economic usefulness of an asset. spreading the cost of an asset over its useful life to the entity