Financial Accounting - A Capital Asset

Question 1 Amortization is always calculated using which method? Correct! Straight Line Declining Balance Sum of Years Units of Production Question 2 1 / 1 pts Which of the following is not a capital asset? Correct! Inventory Buildings Vehicles Equipment Question 3 2 / 2 pts Which method of depreciation is most suitable for an asset whose benefit may be seasonal, or inconsistent? Correct! Units of Production Declining Balance Double Declining Balance Straight Balance Question 4 1 / 1 pts Costs of intangible assets are recovered through Depreciation Corrt! Amortization Depletion Intangible assets cannot be included in financial reporting Question 5 2 / 2 pts Which method of depreciation is most suitable for an asset, such as manufacturing equipment, which will produce product and revenue on a consistent basis? Units of Production Declining Balance Double Declining Balance Correct! Straight Line Question 6 1 / 1 pts Depletion is always calculated using which method? Straight Line Declining Balance Sum of Years Correct! Units of Production Question 7 2 / 2 pts Assume a purchase of an ice cream truck at $41,000, with a $1,000 salvage value. The company intends to use the truck for 100,000 miles before they replace it. If the truck was driven for 15,000 miles during the operating period, what would the depreciation for that period be using the units of production method? Correct! $6,000 $6,150 Cannot determine with information given I need to know how many years of useful life Question 8 1 / 1 pts Which of the following does not accurately discuss depreciation of capital assets? The cost of capital assets is recovered through depreciation to better match costs to the same periods in which the asset provides benefit Depreciation spreads, or expenses, the costs of capital assets over multiple operating periods. Correct! Capital assets are depreciated to ensure minimum tax obligation. Depreciating capital assets also results in proportionate decrease of asset book values over time, and with use. Question 9 2 / 2 pts The purchase price of a piece of manufacturing equipment was $150,000. An additional $15,000 was spent in freight and setup of the equipment. Anticipated salvage value is $10,000, and the machinery has a 7 year useful life. Assuming full year of depreciation and use of the double declining balance method, what is the annual depreciation for year 2? $47,025 $44,175 Correct! $33,623 Cannot be determine with data given Question 10 1 / 1 pts Capital assets are different from current assets in that 100% of cost is expensed out in a single operating period Correct! they will provide benefit for multiple accounting periods they provide benefit in a single accounting period they do not depreciate Question 11 2 / 2 pts The purchase price of a piece of manufacturing equipment was $150,000. An additional $15,000 was spent in freight and setup of the equipment. Anticipated salvage value is $10,000, and the machinery has a 7 year useful life. Assuming full year of depreciation and use of the straight line method, what is the monthly depreciation amount? $1,666 Correct! $1,845 $1,964 Cannot be determine with data given Question 12 1 / 1 pts Which of the following is not an example of intangible assets? Copyrights Patents Franchise Correct! Natural Resources Question 13 2 / 2 pts Which method of depreciation is most often used for tax benefit, expensing out the majority of capital asset costs in the initial years of useful life? Units of Production Declining Balance Methods Straight Line Depreciation No method produces this result Question 14 1 / 1 pts Which of the following long term, or fixed, assets is not depreciated? Buildings Equipment Correct! Land Vehicles Question 15 2 / 2 pts Which of the following factors are not needed/considered in determining depreciation? Useful life Cost of the asset Salvage value Correct! Maintenance costs Question 16 1 / 1 pts What is depletion? The systematic reduction of book value of capital assets The method for recovering costs of intangible assets ct! The method for accounting for use of natural resources in business The process for accounting for goodwill Question 17 2 / 2 pts Which of the following does not accurately describes/discusses the FICA tax? It is a required federal tax withholding from employee earnings ect! It is funded solely through taxes levied on the employer It is a shared tax obligation with each employee and employer contributing 50% of the total obligation It creates an additional payroll expense for the employer Question 18 1 / 1 pts Which of the following statements about current liabilities is not true? Current liabilities are liabilities due within the year ect! Current liabilities are liabilities due beyond the period of one year Current liabilities play an important role in determining liquidity, or the ability to meet financial obligations Current liabilities are sometimes estimated for reporting when the exact amount is unknown Question 19 2 / 2 pts Calculate the appropriate amount of interest for a 9 month, $10,000 loan that carries a 6% interest rate: $600 $150 Correct! $450 Cannot be determined with information provided Question 20 1 / 1 pts Government programs which require employer contributions are referred to as Withholding allowances ect! Payroll expenses Employee benefits Optional withholdings Question 21 2 / 2 pts Which of the following statements about recording loan payments is most accurate? The full amount of each payment reduces the principal balance of the loan Correct! Payments typically include a portion of principal payment in addition to an interest expense The interest expense on the loan applies to the principal balance The principal balance of the loan is reduced only by the interest portion of the payment Question 22 1 / 1 pts If salaries for this pay period total $12,500, how much in total FICA taxes is withheld from employee earnings? Employees do not pay FICA tax; this is an employer tax $775 $181.25 Correct! $956.25 Question 23 2 / 2 pts Which of the following statements about long term liabilities is not true? The current portion of long term liabilities should be reclassified for inclusion in current liabilities reporting on the balance sheet. Long term liabilities are most often associated with growth/expansion. Long term liabilities most often incur the additional cost of interest. ect! Long term liabilities play an important role in communicating and determining liquidity. Question 24 1 / 1 pts If the total mortgage payment is $1,100 and the interest portion is $650, how much will this payment reduce the principal balance of the mortgage? Correct! $450 $650 $1,100 Cannot be determined with the information provided Question 25 2 / 2 pts If salaries for this pay period total $12,500, how much is withheld toward federal income tax obligations? Correct! Cannot be determined with given data as this will vary per employee $0; federal income tax for employees is an employer payroll tax $3,125