Q 1 The present value of expected future earnings of a business in excess of the earnings normally realized in the industry. Recorded when a business entity is purchased at a price in excess of the fair value of its net identifiable assets (excluding goodwill) less liabilities___

Q 2 The combined cash outlays required for repayment of principal amounts borrowed and for payments of interest expense during the period is called debt service

A) true

B) false

Q 3 Intangible assets are those assets that are used in the operation of a business but that have no_____ and are_____

Q4 Goodwill can be estimated and can be reported on the business records any time management feels the business has increased in value

A) true

B) false

Q5 Which accounting principle requires that interest expense, or any expense for operations during a specific period, be recorded in that period?

• A. o Materiality principle
• B. o Going-concern principle
• C. o matching principle
• D. o none of the above

Q 6 On January 1, 1999, Ubot Inc. purchased a piece of equipment for $60,000. It is estimated to have an economic life of 5 years and a salvage value of $10,000. The 200% declining-balance method for depreciation is used. What is the book value of the asset at the end of year 2000 ?

• .A. o $36,000
• B. o $21,600
• C. o $24,000
• D. o $40,000

Q 7 Costs incurred to acquire long-lived assets are capital expenditures.

A) true

B) false