Ch.11

40 Questions  I  By Jlyons08 on May 1, 2012

  

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1.  The following is true of depreciation accounting
A.
B.
C.
D.
2.  Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?
A.
B.
C.
D.
3.  Depreciation accounting
A.
B.
C.
D.
4.  Which of the following most accurately reflects the concept of depreciation as used in accounting?
A.
B.
C.
D.
5.  The major difference between the service life of an asset and its physical life is that
A.
B.
C.
D.
6.  The term "depreciable base," or "depreciation base," as it is used in accounting, refers to
A.
B.
C.
D.
7.  Economic factors that shorten the service life of an asset include
A.
B.
C.
D.
8.  Which of the following is not one of the basic questions that must be answered before the amount of depreciation charge can be computed?
A.
B.
C.
D.
9.  Which of the following is a realistic assumption of the straight-line method of depreciation?
A.
B.
C.
D.
10.  The activity method of depreciation
A.
B.
C.
D.
11.  For income statement purposes, depreciation is a variable expense if the depreciation method used is
A.
B.
C.
D.
12.  If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will
A.
B.
C.
D.
13.  Use of the double-declining balance method
A.
B.
C.
D.
14.  Use of the sum-of-the-years'-digits method
A.
B.
C.
D.
15.  A graph is set up with "yearly depreciation expense" on the vertical axis and "time" on the horizontal axis. Assuming linear relationships, how would the graphs for straight-line and sum-of-the-years'-digits depreciation, respectively, be drawn?
A.
B.
C.
D.
16.  A principal objection to the straight-line method of depreciation is that it
A.
B.
C.
D.
17.  Each year a company has been investing an increasingly greater amount in machinery. Since there is a large number of small items with relatively similar useful lives, the company has been applying straight-line depreciation at a uniform rate to the machinery as a group. The ratio of this group's total accumulated depreciation to the total cost of the machinery has been steadily increasing and now stands at .75 to 1.00. The most likely explanation for this increasing ratio is the
A.
B.
C.
D.
18.  For the composite method, the composite
A.
B.
C.
D.
19.  Watkins Truck Rental uses the group depreciation method for its fleet of trucks. When it retires one of its trucks and receives cash from a salvage company, the carrying value of property, plant, and equipment will be decreased by the
A.
B.
C.
D.
20.  Composite or group depreciation is a depreciation system whereby
A.
B.
C.
D.
21.  When depreciation is computed for partial periods under a decreasing charge depreciation method, it is necessary to
A.
B.
C.
D.
22.  Depreciation is normally computed on the basis of the nearest
A.
B.
C.
D.
23.  Myers Company acquired machinery on January 1, 2005 which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 2010, Myers estimated that the remaining life of this machinery was six years with no salvage value. How should this change be accounted for by Myers?
A.
B.
C.
D.
24.  A change in estimate should
A.
B.
C.
D.
25.  Lynch Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should
A.
B.
C.
D.
26.  Which of following is not a similarity in the accounting treatment for depreciation and cost depletion?
A.
B.
C.
D.
27.  Which of the following is not a difference between the accounting treatment for depreciation and cost depletion
A.
B.
C.
D.
28.  Dividends representing a return of capital to stockholders are not uncommon among companies which
A.
B.
C.
D.
29.  Depletion expense
A.
B.
C.
D.
30.  The most common method of recording depletion for accounting purposes is the
A.
B.
C.
D.
31.  Reserve recognition accounting
A.
B.
C.
D.
32.  Of the following costs related to the development of natural resources, which one is not a part of depletion cost
A.
B.
C.
D.
33.  Which of the following disclosures is not required in the financial statements regarding depreciation?
A.
B.
C.
D.
34.  The book value of a plant asset is
A.
B.
C.
D.
35.  A general description of the depreciation methods applicable to major classes of depreciable assets
A.
B.
C.
D.
36.  The asset turnover ratio is computed by dividing
A.
B.
C.
D.
37.  The rate of return on total assets is computed by dividing
A.
B.
C.
D.
38.  A major objective of MACRS for tax depreciation is to
A.
B.
C.
D.
39.  Under MACRS, which one of the following is not considered in determining depreciation for tax purposes?
A.
B.
C.
D.
40.  If income tax effects are ignored, accelerated depreciation methods
A.
B.
C.
D.
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