Change in accounting estimate

Assignment Help Accounting Basics
Reference no: EM139970

1. Depreciation:

• Measures the decline in market value of an asset
• Measures physical deterioration of an asset
• Is the process of allocating to expense the cost of a plant asset
• Is an outflow of cash from the use of a plant asset
• Is applied to land

2. The maturity date of a note receivable:

• Is the day of the credit sale
• Is the day the note was signed
• Is the day the note is due to be paid
• Is the date of the first payment
• Is the last day of the month

3. A promissory note received from a customer in exchange for an account receivable:

• Is a cash equivalent for the recipient
• Is an account receivable for the recipient
• Is a note receivable for the recipient
• Is a short-term investment for the recipient
• Is a note payable for the recipient

4. Depletion:

• Is the process of allocating the cost of natural resources to periods in which they are consumed
• Is also called depreciation
• Is also called amortization
• Is an unrealized expense reported in equity
• Is the process of allocating the cost of intangibles to periods in which they are used

5. Obsolescence:

• Occurs when an asset is at the end of its useful life
• Refers to a plant asset that is no longer useful in producing goods and services
• Refers to the insufficient capacity of a company's plant assets to meet the company's productive demands
• Occurs when an asset's salvage value is less than its replacement cost
• Does not affect plant assets

6. A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:

• 2 years
• 5 years
• 7 years
• 8 years
• 10 years

7. A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover is equal to:

• 0.82
• 0.90
• 1.09
• 1.11
• 1.26

8. A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is:

• $0.75
• $0.625
• $0.875
• $6.00
• $8.00

9. A change in an accounting estimate is:

• Reflected in past financial statements
• Reflected in future financial statements and also requires modification of past statements
• A change in a calculated amount that is part of financial statements that results from new information or subsequent developments and from better insight or improved judgment
• Not allowed under current accounting rules
• Considered an error in the financial statements

10. Plant assets are:

• Tangible assets used in the operation of a business that have a useful life of more than one accounting period
• Current assets
• Held for sale
• Intangible assets used in the operations of a business that have a useful life of more than one accounting period
• Tangible assets used in the operation of business that have a useful life of less than one accounting period

11. A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1, 2010. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, 2010?

• $1,000
• $1,333
• $1,533
• $4,000
• $4,600

12. A 90-day note issued on April 20 has a maturity date of: (Points : 2)

• July 17
• July 18
• July 19
• July 20
• July 21

Reference no: EM139970

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