Ch.10

44 Questions  I  By Jlyons08 on May 1, 2012

  
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Question Excerpt

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1.  Plant assets may properly include
A.
B.
C.
D.
2.  Which of the following is not a major characteristic of a plant asset?
A.
B.
C.
D.
3.  Which of these is not a major characteristic of a plant asset?
A.
B.
C.
D.
4.  Cotton Hotel Corporation recently purchased Emporia Hotel and the land on which it is located with the plan to tear down the Emporia Hotel and build a new luxury hotel on the site. The cost of the Emporia Hotel should be
A.
B.
C.
D.
5.  The cost of land does not include
A.
B.
C.
D.
6.  The cost of land typically includes the purchase price and all of the following costs except
A.
B.
C.
D.
7.  If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on
A.
B.
C.
D.
8.  The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to
A.
B.
C.
D.
9.  Fences and parking lots are reported on the balance sheet as
A.
B.
C.
D.
10.  Historical cost is the basis advocated for recording the acquisition of property, plant, and equipment for all of the following reasons except
A.
B.
C.
D.
11.  To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be
A.
B.
C.
D.
12.  Which of the following costs are capitalized for self-constructed assets?
A.
B.
C.
D.
13.  Which of the following assets do not qualify for capitalization of interest costs incurred during construction of the assets?
A.
B.
C.
D.
14.  Assets that qualify for interest cost capitalization include
A.
B.
C.
D.
15.  Assets that qualify for interest cost capitalization include
A.
B.
C.
D.
16.  When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to
A.
B.
C.
D.
17.  The period of time during which interest must be capitalized ends when
A.
B.
C.
D.
18.  Which of the following statements is true regarding capitalization of interest?
A.
B.
C.
D.
19.  Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is
A.
B.
C.
D.
20.  When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be
A.
B.
C.
D.
21.  When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be
A.
B.
C.
D.
22.  Interest cost that is capitalized should
A.
B.
C.
D.
23.  Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset?
A.
B.
C.
D.
24.  Which of the following is the recommended approach to handling interest incurred in financing the construction of property, plant and equipment?
A.
B.
C.
D.
25.  Which of the following nonmonetary exchange transactions represents a culmination of the earning process?
A.
B.
C.
D.
26.  When boot is involved in an exchange having commercial substance
A.
B.
C.
D.
27.  The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at
A.
B.
C.
D.
28.  Ringler Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is not expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will
A.
B.
C.
D.
29.  Plant assets purchased on long-term credit contracts should be accounted for at
A.
B.
C.
D.
30.  When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the
A.
B.
C.
D.
31.  When a closely held corporation issues preferred stock for land, the land should be recorded at the
A.
B.
C.
D.
32.  Accounting recognition should be given to some or all of the gain realized on a nonmonetary exchange of plant assets except when the exchange has
A.
B.
C.
D.
33.  For a nonmonetary exchange of plant assets, accounting recognition should not be given to
A.
B.
C.
D.
34.  When an enterprise is the recipient of a donated asset, the account credited may be a
A.
B.
C.
D.
35.  A plant site donated by a township to a manufacturer that plans to open a new factory should be recorded on the manufacturer's books at
A.
B.
C.
D.
36.  In order for a cost to be capitalized (capital expenditure), the following must be present:
A.
B.
C.
D.
37.  An improvement made to a machine increased its fair market value and its production capacity by 25% without extending the machine's useful life. The cost of the improvement should be
A.
B.
C.
D.
38.  Which of the following is a capital expenditure?
A.
B.
C.
D.
39.  Which of the following is not a capital expenditure?
A.
B.
C.
D.
40.  In accounting for plant assets, which of the following outlays made subsequent to acquisition should be fully expensed in the period the expenditure is made?
A.
B.
C.
D.
41.  An expenditure made in connection with a machine being used by an enterprise should be
A.
B.
C.
D.
42.  When a plant asset is disposed of, a gain or loss may result. The gain or loss would be classified as an extraordinary item on the income statement if it resulted from
A.
B.
C.
D.
43.  The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were
A.
B.
C.
D.
44.  Which of the following statements about involuntary conversions is false?
A.
B.
C.
D.
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