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.