Ac11 Quiz 5 F2006

AC 11 Quiz #5 (F’06)

Suffolk County Community College

Prof. Rovegno

1. The diminishing value of a plant asset caused by usage or age is known as...

a. depletion

b. loss of value c. sum of the years digits d. depreciation

8. An expenditure for property which is expected to be consumed within one year may be referred to as a... a. b. c. d.

2. The value that a plant asset is expected to have at the end of its useful life is known as a. b. c. d.

residual value salvage value trade-in value all of the above

9. Property that has value, but no physical nature is called a. b. c. d.

3. Which of the following is considered to be an accelerated depreciation method... a. b. c. d.

straight line units of activity 200% double declining balance all of the above

4. Equipment costing $35,000 with accumulated depreciation of $32,500 was sold for $1,500. What is the amount of gain or loss on the sale?

a. $1,000 gain b. $2,500 loss c. $1,000 loss d. $2,500 gain

$1,000 gain $2,500 loss $1,000 loss $2,500 gain

6. The accounting term that is defined as the depreciated value of a fixed asset

a. boot b.

residual value

c. book value d. bribe

7. An expenditure for property which is expected to last

fixed asset natural resource intangible asset current asset

10. The balance in the Accumulated Depreciation account represents the a. cash fund to be used to replace plant assets. b. amount to be deducted from the cost of the plant asset to arrive at its fair market value. c. amount charged to expense in the current period. d. amount charged to expense since the acquisition of the plant asset. 11. Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

5. Equipment costing $35,000 with accumulated depreciation of $32,500 was sold for $5,000. What is the amount of gain or loss on the sale? a. b. c. d.

capital expenditure intangible asset revenue expenditure cost of goods sold

a. b. c. d.

Salvage value Estimated useful life Cash needed to replace the plant asset Cost

12. The book value of an asset is equal to the a. b. c. d.

asset's market value less its historical cost. blue book value relied on by secondary markets. replacement cost of the asset. asset's cost less accumulated depreciation.

13. Recording depreciation each period is necessary in accordance with the a. b. c. d.

going concern principle. cost principle. matching principle. asset valuation principle.

longer than one year may be referred to as a...

a. capital expenditure

b. intangible asset c. revenue expenditure d. cost of goods sold

14. In computing depreciation, salvage value is a. the fair market value of a plant asset on the date of acquisition. b. subtracted from accumulated depreciation to determine the plant asset's depreciable cost.

AC 11 Quiz #5 (F’06)

Suffolk County Community College

Prof. Rovegno

c. an estimate of a plant asset's value at the end of its useful life. d. ignored in all the depreciation methods. 15. Equipment was purchased for $45,000. Freight charges amounted to $2,100 and there was a cost of $6,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $9,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be a. b. c. d.

20. The calculation of depreciation using the declining balance method, a. ignores salvage value in determining the amount to which a constant rate is applied. b. multiplies a constant percentage times the previous year's depreciation expense. c. yields an increasing depreciation expense each period. d. multiplies a declining percentage times a constant book value.

$10,620. $8,820. $7,380. $7,200. 21.

16. A company purchased office equipment for $25,000 and estimated a salvage value of $5,000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the 200% double-declining-balance method is used is a. b. c. d.

200%. 25%. 40%. 4%.

17. The declining-balance produces a. b. c. d.

method

of

depreciation

a decreasing depreciation expense each period. an increasing depreciation expense each period. a declining percentage rate each period. a constant amount of depreciation expense each period.

18. The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method which a. is used for tax purposes. b. must be used for financial statement purposes. c. is required by the SEC. d. expenses an asset over a single year because capital acquisitions must be expensed in the year purchased. 19.

Which of the following methods of computing depreciation is usage based? a. b. c. d.

Straight-line Declining-balance Units-of-activity None of these

A gain or loss on disposal of a plant asset is determined by comparing the a. replacement cost of the asset with the asset's original cost. b. book value of the asset with the asset's original cost. c. original cost of the asset with the proceeds received from its sale. d. book value of the asset with the proceeds received from its sale.

22. The book value of a plant asset is the difference between the a. replacement cost of the asset and its historical cost. b. cost of the asset and the amount of depreciation expense for the year. c. cost of the asset and the accumulated depreciation to date. d. proceeds received from the sale of the asset and its original cost. 23. When an old plant asset is exchanged for a similar new plant asset and a gain on disposal occurs, the gain is a. Recorded b. Not recorded c. Added to the price of the new asset d. Equal to the trade-in allowance

24.When an old plant asset is exchanged for a new asset, the value received is called a. Trade-in allowance b. Gain c. Loss d. boot

AC 11 Quiz #5 (F’06)

Suffolk County Community College

25. Depletion is a. a decrease in market value of natural resources. b. the amount of spoilage that occurs when natural resources are extracted. c. the allocation of the cost of natural resources to expense. d. the method used to record unsuccessful patents. 26. To qualify as natural resources in the accounting sense, assets must be a. b. c. d.

underground. replaceable. of a mineral nature. physically extracted in operations.

27. Intangible assets are the rights and privileges that result from ownership of long-lived assets that a. b. c. d.

must be generated internally. are depletable natural resources. have been exchanged at a gain. do not have physical substance.

28. Cost allocation of an intangible asset is referred to as a. b. c. d.

amortization. depletion. accretion. capitalization.

29. Research and development costs a. are classified as intangible assets. b. must be expensed when incurred under generally accepted accounting principles. c. should be included in the cost of the patent they relate to. d. are capitalized and then amortized over a period not to exceed 40 years. 30. Which one of the following payroll taxes does not result in a payroll tax expense for the employer? a. b. c. d.

FICA tax Federal income tax Federal unemployment tax State unemployment tax

Prof. Rovegno

31. Sue Stein's regular rate is $15 per hour . She worked 48 hours last week & gets time and ½ for all hours over 40. Her gross wages were a. b. c. d.

$720. $600. $780. $1,080.

32. Employees claim withholding allowances on a. Form W-4. b. Form W-2. c. Form 1040. d. Form WD-40. 33. Which one of the following payroll taxes is not withheld from an employee's wages a. b. c. d.

Federal income tax Federal unemployment tax State income tax FICA tax

34. A tax paid equally by the employer and employee is a. b. c. d.

federal income tax. federal unemployment tax. state unemployment tax. FICA tax.

35. The effective federal unemployment tax rate in most places in the USA is a. b. c. d.

6.2%. 0.8%. 5.4%. 8.0%.

36. Which of the following factors has an impact on the amount of Federal Income Tax that is withheld from an employee a. b. c. d.

Marital Status # of Withholding Allowances Income Bracket All of the Above

37. Which of the following may be described as an optional deduction a. b. c. d.

Medicare Tax Income Tax (Federal or State) Health Insurance None of the above

AC 11 Quiz #5 (F’06)

Suffolk County Community College

38. The record of an employee’s earnings & deductions is called a. b. c. d.

Payroll Register Voucher Register W-2 Form Employee Earnings Record

39. The employer’s liability for payroll taxes includes all of the following except a. b. c. d. e.

Federal Unemployment Taxes State Unemployment Taxes FICA Tax State Sales & Use Tax Medicare Tax

40. The Federal Income Tax is an example of which of the following types of taxes a. b. c. d.

Graduated Tax Flat Tax Indirect Tax Double Tax

41. Which of the following payroll taxes has an earnings cap (ie. Earnings over a certain level is not taxed) a. b. c. d.

Federal Withholding State Withholding FICA Medicare

42. The amount of earnings subject to Social Security (FICA) tax for 2006 is a. b. c. d.

$7,000 $8,500 $94,200 entire earnings

43. The amount of earnings subject to Federal unemployment taxes for 2006 is a. b. c. d.

$7,000 $8,500 $94,200 entire earnings

44. The amount of earnings subject to NYS unemployment taxes for 2006 is a. b. c. d.

$7,000 $8,500 $94,200 entire earnings

Prof. Rovegno

45. The amount of earnings subject to Medicare taxes for 2006 is a. b. c. d.

$7,000 $8,500 $94,200 entire earnings

46. The Social Security (FICA) tax rate for 2006 is a. b. c. d.

5.4% 6.2% 0.8% 1.45%

47. The Medicare tax rate for 2006 is a. b. c. d.

5.4% 6.2% 0.8% 1.45%

48. Payroll tax information must be filed quarterly on IRS Form a. b. c. d.

W4 941 W3 W2

49. Employers must report each employees’ earnings & deductions to them on IRS Form a. b. c. d.

W4 941 W3 W2

50. Employers must send copies of all employee cumulative earnings and deductions to the IRS. A summary of the wages & deductions for all employees is reported to the IRS on Form a. b. c. d.

W4 941 W3 W2

AC 11 Quiz #5 (F’06)

Suffolk County Community College

Prof. Rovegno