Basic Financial Accounting - Fixed Assets

11 Questions | By ZukoDaniel | Updated: Mar 20, 2022 | Attempts: 285

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Basic Financial Accounting - Fixed Assets - Quiz

How to post fixed assets. A thorough course in Basic Financial accountingImage courtesy of adamr / FreeDigitalPhotos. Net

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1.

3. Journal entry of fixed assets – Cash purchase without VATA company has purchased a building for 4.000.000. The building has been paid for in cash and will be used for production in connection with the firm’s activities.How should the information above be posted?
- A.
  
  The account for building under tangible assets is credited 4.000.000 while the cash account (asset) is debited 4.000.000.
- B.
  
  The account for building under intangible assets is debited 4.000.000 while the cash account (asset) is credited 4.000.000.
- C.
  
  The account for building under tangible assets is debited 4.000.000 while the cash account (asset) is credited 4.000.000.
2.

4. Journal entry of fixed assets – Cash purchase with VATA company has purchased a machine for 2.000.000. The machine has been paid for in cash and will be used for production in connection with the firm’s activities. The purchase amount includes 400.000 in VAT. The VAT amount is fully deductible.How should the information above be posted?
- A.
  
  The account formachinery under tangible assets is credited 2.000.000 while the cash account (asset) is debited 2.000.000.
- B.
  
  The account for machinery under tangible assets is debited 2.000.000, the cash account (asset) is credited 1.600.000 while the account for input VAT (liability) is debited 400.000.
- C.
  
  The account for machinery under tangible assets is debited 1.600.000, the cash account (asset) is credited 2.000.000 while the account for input VAT (liability) is debited 400.000.
- D.
  
  The account for machinery under tangible assets is debited 1.600.000, the cash account (asset) is credited 2.000.000 while the account for output VAT (liability) is credited 400.000..
3.

5. Journal entry of fixed assets – Credit purchase without VATA company has purchased a building for 8.000.000. The building has not yet been paid for and will be used for production in connection with the firm’s activities.How should the information above be posted?
- A.
  
  The account for building under tangible assets is debited 8.000.000 while the other creditors (liability) account is credited 8.000.000.
- B.
  
  The account for building under tangible assets is credited 8.000.000 while the cash account (asset) is debited 8.000.000.
- C.
  
  The account for building under tangible assets is debited 8.000.000 while the account for prepaid expenses (asset) is credited 8.000.000.
4.

6. Journal entry of fixed assets – Credit purchase with VATA company has purchased a machine for 500.000. The machine has not yet been paid for and will be used for production in connection with the firm’s activities. The purchase amount includes 100.000 in VAT. The VAT amount is fully deductible.How should the information above be posted?
- A.
  
  The account for machinery under tangible assets is debited 400.000, the other creditors account (liability) is credited 500.000 while the account for output VAT (liability) is credited 100.000..
- B.
  
  The account formachinery under tangible assets is credited 500.000 while the other creditors account (asset) is debited 500.000.
- C.
  
  The account for machinery under tangible assets is debited 500.000, the other creditors account (liability) is credited 400.000 while the account for input VAT (liability) is debited 100.000.
- D.
  
  The account for machinery under tangible assets is debited 400.000, the other creditors account (liability) is credited 500.000 while the account for input VAT (liability) is debited 100.000.
- E.
  
  The account for machinery under tangible assets is credited 800.000, the other creditors account (liability) is debited 1.000.000 while the account for input VAT (liability) is credited 200.000.
5.

7. Journal entry of depreciations on fixed assets – Full yearA company owns a machine which is used in the production. The machine was purchased for the amount of 2.200.000 at the beginning of the fiscal year. The company estimates that the machine has a life span of 5 years. After that the machine is estimated to have a scrap value of 200.000.The company uses straight-line depreciations for machines to reflect the use (cost) of the machine.How should the information above be posted - calculate and post the depreciations.
- A.
  
  The account for depreciations (profit/loss) is debited 440.000 while the account for accumulated depreciations (assets) is credited 440.000.
- B.
  
  The account for depreciations (profit/loss) is debited 400.000 while the account for accumulated depreciations (assets) is credited 400.000.
- C.
  
  The account for depreciations (profit/loss) is credited 440.000 while the account for accumulated depreciations (assets) is debited 440.000.
- D.
  
  The account for depreciations (profit/loss) is credited 400.000 while the account for accumulated depreciations (assets) is debited 400.000.
6.

8. Journal entry of depreciations on fixed assets – Part of yearA company owns a machine which is used in the production. The machine was purchased for the amount of 3.500.000 in the middle of the fiscal year. The company estimates that the machine has a life span of 6 years. After that the machine is estimated to have a scrap value of 500.000.The company uses straight-line depreciations for machines to reflect the use (cost) of the machine.How should the information above be posted - calculate and post the depreciations.
- A.
  
  The account for depreciations (profit/loss) is debited 250.000 while the account for accumulated depreciations (assets) is credited 250.000.
- B.
  
  The account for depreciations (profit/loss) is debited 500.000 while the account for accumulated depreciations (assets) is credited 500.000.
- C.
  
  The account for depreciations (profit/loss) is debited 583.333 while the account for accumulated depreciations (assets) is credited 583.333.
- D.
  
  The account for depreciations (profit/loss) is credited 291.667 while the account for accumulated depreciations (assets) is debited 291.667.
7.

9. Journal entry of impairment on fixed assets A company owns a machine which is used in the production. The machine was purchased for the amount of 2.000.000 some years ago. The accumulated depreciations are 800.000 which means that the booked value of the machine is (2.000.000 – 800.000) = 1.200.000. However, the company estimates that the value of the machine is only 300.000. There is thus a negative gap between the booked value and the current value.How should the information above be posted?
- A.
  
  The impairment account (profit/loss) is debited 900.000 while the accumulated depreciations account (asset) is credited 900.000.
- B.
  
  The impairment account (profit/loss) is debited 300.000 while the accumulated depreciations account (asset) is credited 300.000.
- C.
  
  The impairment account (profit/loss) is debited 1.700.000 while the accumulated depreciations account (asset) is credited 1.700.000.
- D.
  
  The impairment account (profit/loss) is credited 300.000 while the accumulated depreciations account (asset) is debited 300.000.
8.

10. Journal entry of fixed assets – Cash sale without VATA company has just sold a building which has been used in the company’s production. The building was purchased for the amount of 4.000.000 some years ago. The accumulated depreciations are 1.800.000 (including depreciations for the current fiscal year) which means that the booked value of the building is (4.000.000 – 1.800.000) = 2.200.000. The building has been sold for the amount of 3.000.000 in cash. The company has thus obtained a profit of (3.000.000-2.200.000) = 800.000.How should the information above be posted?
- A.
  
  The gain on asset account (profit/loss) is credited 800.000, the tangible asset account is debited 1.800.000, the cash account (asset) is debited 3.000.000 while the accumulated depreciations account (asset) is credited 4.000.000.
- B.
  
  The revenue account (profit/loss) is credited 800.000, the tangible asset account is credited 4.000.000, the cash account (asset) is debited 3.000.000 while the accumulated depreciations account (asset) is debited 1.800.000.
- C.
  
  The gain on assets account (profit/loss) is credited 800.000, the tangible asset account is credited 4.000.000, the cash account (asset) is debited 3.000.000 while the accumulated depreciations account (asset) is debited 1.800.000.
- D.
  
  The revenue account (profit/loss) is debited 800.000, the tangible asset account is debited 4.000.000, the cash account (asset) is credited 3.000.000 while the accumulated depreciations account (asset) is credited 1.800.000.
9.

11. Journal entry of fixed assets – Cash sale with VAT A company just sold a machine which has been used in the company’s production. The machine was purchased for the amount of 1.000.000 some years ago. The accumulated depreciations are 800.000 (including depreciations for the current fiscal year) which means that the booked value of the machine is (1.000.000 – 800.000) = 200.000. The machine has been sold for the amount of 100.000 (including 20.000 in output VAT) in cash. The company has thus incurred a loss of ((100.000-20.000)-200.000) = 120.000. How should the information above be posted?
- A.
  
  The loss on assets account (profit/loss) is debited 120.000, the tangible fixed asset account is credited 1.000.000, the accumulated depreciations account (asset) is debited 800.000, the input VAT account (liability) is credited 20.000 while the cash account (asset) is debited 100.000.
- B.
  
  The loss on assets account (profit/loss) is debited 120.000, the tangible fixed asset account is credited 1.000.000, the accumulated depreciations account (asset) is debited 800.000, the output VAT account (liability) is credited 20.000 while the cash account (asset) is debited 100.000.
- C.
  
  The loss on assets account (profit/loss) is debited 120.000, the intangible fixed asset account is credited 1.000.000, the accumulated depreciations account (asset) is debited 800.000, the output VAT account (liability) is credited 20.000 while the cash account (asset) is debited 100.000.
- D.
  
  The loss on assets account (profit/loss) is credited 120.000, the tangible fixed asset account is debited 1.000.000, the accumulated depreciations account (asset) is credited 800.000, the output VAT account (liability) is debited 20.000 while the cash account (asset) is credited 100.000.
10.

12. Journal entry of fixed assets – Credit sale without VATA company just sold a building which has been used in the company’s production. The building was purchased for the amount of 8.000.000 some years ago. The accumulated depreciations are 6.000.000 (including depreciations for the current fiscal year) which means that the booked value of the building is (8.000.000 – 6.000.000) = 2.000.000. The building has been sold for the amount of 3.700.000. However the amount is not to be received until 6 months from now. The company has thus obtained a profit of (3.700.000-2.000.000) = 1.700.000.How should the information above be posted?
- A.
  
  The gain on asset account (profit/loss) is credited 3.700.000, the tangible fixed assets account is credited 8.000.000, the accumulated depreciations account (asset) is debited 6.000.000 while the other debtors account is debited 2.000.000.
- B.
  
  The gain on asset account (profit/loss) is debited 1.700.000, the tangible fixed assets account is debited 8.000.000, the accumulated depreciations account (asset) is credited 6.000.000 while the trade debtors account is credited 3.700.000.
- C.
  
  The gain on asset account (profit/loss) is credited 1.700.000, the tangible fixed assets account is credited 8.000.000, the accumulated depreciations account (asset) is debited 6.000.000 while the trade debtors account is debited 3.700.000.
- D.
  
  The gain on asset account (profit/loss) is credited 1.700.000, the tangible fixed assets account is credited 8.000.000, the accumulated depreciations account (asset) is debited 6.000.000 while the other debtors account is debited 3.700.000.
11.

13. Journal entry of fixed assets – Credit sale with VATA company just sold a machine which has been used in the company’s production. The machine was purchased for the amount of 1.500.000 some years ago. The accumulated depreciations are 500.000 (including depreciations for the current fiscal year) which means that the booked value of the machine is (1.500.000 – 500.000) = 1.000.000. The machine has been sold for the amount of 800.000 (including 160.000 in output VAT). However the amount is not to be received until 6 months from now. The company has thus incurred a loss of ((800.000-160.000)-1.000.000) = 360.000.How should the information above be posted?
- A.
  
  The loss on assets account (profit(loss) is debited 360.000, the tangible assets account is credited 1.500.000, the accumulted depreciations account (asset) is debited 500.000, the output VAT account (liability) is credited 160.000 while the other debtors account (asset) is debited 800.000.
- B.
  
  The loss on assets account (profit(loss) is debited 360.000, the tangible assets account is credited 1.500.000, the accumulted depreciations account (asset) is debited 500.000, the output VAT account (liability) is credited 160.000 while the trade debtors account (asset) is debited 800.000.
- C.
  
  The loss on assets account (profit(loss) is credited 360.000, the tangible assets account is debited 1.500.000, the accumulted depreciations account (asset) is credited 500.000, the output VAT account (liability) is debited 160.000 while the trade debtors account (asset) is credited 800.000.
- D.
  
  The revenue account (profit(loss) is debited 360.000, the tangible assets account is credited 1.500.000, the accumulted depreciations account (asset) is debited 500.000, the output VAT account (liability) is credited 160.000 while the other debtors account (asset) is debited 800.000.