Reference no: EM13767541

Question 1 Cost allocation of an intangible asset is referred to as

• amortization.
• depreciation.
• accretion.
• capitalization.

Question 2 All of the following statements are false regarding depreciation except

• depreciation is an asset valuation process.
• depreciation does not apply to land improvements.
• recognizing depreciation results in the accumulation of cash for asset replacement.
• depreciation does not apply to land.

Question 3 Short-term notes receivable

• have a related allowance account called Allowance for Doubtful Notes Receivable.
• are reported at their gross realizable value.
• use the same estimations and computations as accounts receivable to determine cash realizable value.
• present the same valuation problems as long-term notes receivables.

Question 4 The matching rule relates to credit losses by stating that bad debt expense should be recorded

• in the same period as allowed for tax purposes.
• in the period of the sale.
• for an exact amount.
• in the period of the loss.

Question 5 A note receivable is a negotiable instrument which

• eliminates the need for a bad debts allowance.
• can be transferred to another party by endorsement.
• takes the place of checks in a business firm.
• can only be collected by a bank.

Question 6 Allowing only the treasurer to sign checks is an example of

• documentation procedures.
• separation of duties.
• other controls.
• establishment of responsibility.

Question 7 All of the following requirements about internal controls were enacted under the Sarbanes-Oxley Act of 2002 except:

• independent outside auditors must attest to the level of internal control.
• companies must develop sound internal controls over financial reporting.
• companies must continually assess the functionality of internal controls.
• independent outside auditors must eliminate redundant internal control.

Question 8 Each of the following is a feature of internal control except

• an extensive marketing plan.
• bonding of employees.
• separation of duties.
• recording of all transactions.

Question 9 Equipment with a cost of $256,000 has an estimated salvage value of $24,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

• $64,000.
• $70,000.
• $66,000.
• $58,000.

Question 10 Mitchell Corporation bought equipment on January 1, 2012 .The equipment cost $120,000 and had an expected salvage value of $20,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

• $120,000.
• $100,000.
• $20,000.
• $16,667.