Question 1 cost allocation of an intangible asset is


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.

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Accounting Basics: Question 1 cost allocation of an intangible asset is
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