1. Misclassification (intentional or unintentional) of a revenue expenditure as a capital expenditure:

a. Results in overstated income and understated assets.

b. Results in understated income and understated assets.

c. Results in understated income and overstated assets.

d. Results in overstated income and overstated assets.

2. In order to calculate periodic depreciation in any year of an asset's life, all of the following must be known except:

• a. Useful life.
• b.Fair market value.
• c. Residual value.
• d. Acquisition cost.

3. If a company owns an influential (i.e., significant), but noncontrolling, interest in the equity securities of another company

• a. It must account for the investment using the equity method.
• b. It must classify the investment as either available-for-sale or trading.
• c. It must present consolidated financial statements.
• d. it must amortize the investment over its expected useful life.

4. Which of the following are interchangeable labels for plant assets? (Select all that apply.)

• a. LB&M.
• b. Noncurrent assets.
• c. Fixed operating assets.
• d. PPE