Some simple accounting questions.

1.When selecting a partial-year depreciation policy, the accountant should choose a method that:

Select one:

a. conforms to the cost principle

b. minimizes depreciation

c. maximizes depreciation

d. best reflects the business reality of the company

2.Which of the following factors cannot be attributed to increasing Goodwill?

Select one:

a. Experienced Management

b. A Common Product

c. A Skilled Workforce

d. Brand Recognition

3.Richard Cook purchased a company with assets of $500,000 and liabilities of $400,000. He paid $150,000 for the company. The amount of goodwill to be recorded is:

Select one:

a. $50,000

b. $100,000

c. $0

d. $150,000

4.Links Emporium decides to sell an old truck. The balance in the accumulated depreciation account related to this truck after its disposal would be:

Select one:

a. zero

b. the cost of disposed asset

c. the amount of cash received from sale

d. the profit or loss resulting from the sale of the asset

5.True or False: The value of goodwill can be increased if a company develops a new unique product or innovation.

Select one:

True

False

6.Susan Snow purchased a company with assets of $775,000 and liabilities of $525,000. She paid $250,000 for the company. The amount of goodwill to be recorded is:

Select one:

a. None of the available choices

b. $150,000

c. $250,000

d. $50,000

7.The most commonly term used when natural resources decrease in value as a result of use is known as:

Select one:

a. depletion

b. amortization

c. depreciation

d. contra asset

8.A contra long-term asset account normally has a:

Select one:

a. credit balance

b. it depends on the type of asset account to which the contra account is linked

c. zero balance

d. debit balance

9.A company purchased an asset for $100,000. The asset is expected to last for 10 years, with no residual value at the end of its useful life. Assume that the company has adopted a partial-year depreciation policy. Half of a year's depreciation is taken in the year of purchase and sale, while a full years depreciation is applied to the remaining years. Therefore, the amount of depreciation recorded in the year of purchase is:

Select one:

a. $5,000

b. $15,000

c. $10,000

d. $0

10.The journal entry to record the amortization of Goodwill would be:

Select one:

a. Dr Loss on Impairment of Goodwill, Cr Goodwill

b. Dr Amortization Expense - Goodwill, Cr Accumulated Amortization - Goodwill

c. Dr Depletion Expense Goodwill, Cr Accumulated Depletion - Goodwill

d. No journal entry is recorded

11.Carrie Wilcox purchased the rights to use a trademark for five years. Carrie paid $100,000 for her purchase. The vendor, who no longer used the trademark, had paid $200,000 in legal fees and licenses to register the trademark. Carrie should record the trademark at a value of:

Select one:

a. $300,000

b. $200,000

c. $100,000

d. $0

12.

The cost of a capital asset:

Select one:

a. is limited to the purchase price only

b. includes all costs associated with acquiring the asset

c. excludes installation fees

d. includes routine expenses

13.Use the information below:

A company purchased a basket of assets for a lump sum payment of $73,000. However the appraised values for property, plant and equipment were $50,000, $40,000 and $10,000 respectively. Therefore, the journal entry to record the purchase includes

Select one:

a. a debit to equipment of $7,300

b. none of the available choices

c. a debit to long-term assets of $100,000

d. a debit to equipment of $10,000

14.When profits are declining, management has been known to sometimes breach ethics by:

Select one:

a. classifying a payment as an expense, when it really should be capitalized

b. including long-term assets in the current assets section of the balance sheet

c. increase depreciation expense for the period

d. capitalizing a payment, when it really should be expensed

15.The purchase of a new motor for a vehicle that will increase the useful life by five years should be treated as:

Select one:

a. an increase in the book value of the vehicle

b. an expense

c. a non-cash expense

d. depreciation

16.LIN Company purchased an asset for $60,000 on July 1, 2013. The asset is expected to have a useful life of 5 years with a residual value of $5,000. LIN has a December 31st year end. What is the amount of depreciation expense to be recorded in the year of 2013?

Select one:

a. $12,000

b. $6,000

c. $11,000

d. $5,500

17.A company reports the following information: Sales of $100,000; Beginning assets of $200,000, Ending assets of $250,000; Net Income of $5,000. Thereturn on assets(to the nearest whole number) is:

Select one:

a. 555%

b. 44%

c. 2%

d. 5%

18.When calculating depletion for natural resources, if the number of total units available increases, how would this affect the calculation of the per unit depletion assuming all other variables remain constant? Assume units-of-production is being used.

Select one:

a. an increase in depletion per unit

b. no change in depletion per unit

c. Impossible to determine

d. a decrease in depletion per unit

19.Which of the following expenditures would not be capitalized?

Select one:

a. A material expenditure increasing the companys operating costs

b. A material expenditure extending the life of an asset

c. A non-material expenditure that reduces the companys operating costs

d. A material expenditure improving the productivity of an asset

20.A company has equipment that cost $28,000, with a useful life of 7 years and a residual value of $7,000. After 4 years of use, the company decided to sell the equipment for $15,600. This sale would result in a gain or loss in the amount of?

Select one:

a. $400 Gain

b. $400 Loss

c. $3,600 Loss

d. $3,600 Gain