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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 8. An expenditure for property which is expected to be


b. loss of value consumed within one year may be referred to as a...
c. sum of the years digits
d. depreciation a. capital expenditure
b. intangible asset
2. The value that a plant asset is expected to have at c. revenue expenditure
the end of its useful life is known as d. cost of goods sold

a. residual value 9. Property that has value, but no physical nature is


b. salvage value called
c. trade-in value
d. all of the above a. fixed asset
b. natural resource
3. Which of the following is considered to be an c. intangible asset
accelerated depreciation method... d. current asset

a. straight line 10. The balance in the Accumulated Depreciation


b. units of activity account represents the
c. 200% double declining balance
d. all of the above a. cash fund to be used to replace plant assets.
b. amount to be deducted from the cost of the plant
4. Equipment costing $35,000 with accumulated asset to arrive at its fair market value.
depreciation of $32,500 was sold for $1,500. What is c. amount charged to expense in the current
the amount of gain or loss on the sale? period.
d. amount charged to expense since the
acquisition of the plant asset.
a. $1,000 gain
b. $2,500 loss 11. Which one of the following items is not a
c. $1,000 loss consideration when recording periodic depreciation
d. $2,500 gain expense on plant assets?

5. Equipment costing $35,000 with accumulated a. Salvage value


depreciation of $32,500 was sold for $5,000. What is b. Estimated useful life
the amount of gain or loss on the sale? c. Cash needed to replace the plant asset
d. Cost
a. $1,000 gain
b. $2,500 loss 12. The book value of an asset is equal to the
c. $1,000 loss
d. $2,500 gain a. asset's market value less its historical cost.
b. blue book value relied on by secondary markets.
6. The accounting term that is defined as the c. replacement cost of the asset.
depreciated value of a fixed asset d. asset's cost less accumulated depreciation.

a. boot 13. Recording depreciation each period is necessary in


b. residual value accordance with the
c. book value
a. going concern principle.
d. bribe b. cost principle.
c. matching principle.
7. An expenditure for property which is expected to last d. asset valuation principle.
longer than one year may be referred to as a...
14. In computing depreciation, salvage value is
a. capital expenditure
b. intangible asset a. the fair market value of a plant asset on the date
of acquisition.
c. revenue expenditure b. subtracted from accumulated depreciation to
d. cost of goods sold 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 20. The calculation of depreciation using the declining
charges amounted to $2,100 and there was a cost of balance method,
$6,000 for building a foundation and installing the
equipment. It is estimated that the equipment will a. ignores salvage value in determining the
have a $9,000 salvage value at the end of its 5-year amount to which a constant rate is applied.
useful life. Depreciation expense each year using b. multiplies a constant percentage times the
the straight-line method will be previous year's depreciation expense.
c. yields an increasing depreciation expense
a. $10,620. each period.
b. $8,820. d. multiplies a declining percentage times a
c. $7,380. constant book value.
d. $7,200.
21. A gain or loss on disposal of a plant asset is
determined by comparing the
16. A company purchased office equipment for $25,000
and estimated a salvage value of $5,000 at the end a. replacement cost of the asset with the
of its 5-year useful life. The constant percentage to asset's original cost.
be applied against book value each year if the 200% b. book value of the asset with the asset's
double-declining-balance method is used is original cost.
c. original cost of the asset with the proceeds
a. 200%. received from its sale.
b. 25%. d. book value of the asset with the proceeds
c. 40%. received from its sale.
d. 4%.
22. The book value of a plant asset is the difference
17. The declining-balance method of depreciation between the
produces
a. replacement cost of the asset and its
a. a decreasing depreciation expense each period. historical cost.
b. an increasing depreciation expense each period. b. cost of the asset and the amount of
c. a declining percentage rate each period. depreciation expense for the year.
d. a constant amount of depreciation expense each c. cost of the asset and the accumulated
period.
depreciation to date.
d. proceeds received from the sale of the asset
18. The Modified Accelerated Cost Recovery System
and its original cost.
(MACRS) is a depreciation method which
23. When an old plant asset is exchanged for a similar
a. is used for tax purposes.
new plant asset and a gain on disposal occurs, the
b. must be used for financial statement
gain is
purposes.
c. is required by the SEC.
a. Recorded
d. expenses an asset over a single year
b. Not recorded
because capital acquisitions must be
c. Added to the price of the new asset
expensed in the year purchased.
d. Equal to the trade-in allowance
19. Which of the following methods of computing
depreciation is usage based? 24.When an old plant asset is exchanged for a new
asset, the value received is called
a. Straight-line
b. Declining-balance a. Trade-in allowance
c. Units-of-activity b. Gain
d. None of these c. Loss
d. boot
AC 11 Quiz #5 (F’06) Suffolk County Community College Prof. Rovegno

25. Depletion is 31. Sue Stein's regular rate is $15 per hour . She worked
48 hours last week & gets time and ½ for all hours
a. a decrease in market value of natural over 40. Her gross wages were
resources.
b. the amount of spoilage that occurs when a. $720.
natural resources are extracted. b. $600.
c. the allocation of the cost of natural c. $780.
resources to expense. d. $1,080.
d. the method used to record unsuccessful
patents. 32. Employees claim withholding allowances on

26. To qualify as natural resources in the accounting a. Form W-4.


sense, assets must be b. Form W-2.
c. Form 1040.
a. underground. d. Form WD-40.
b. replaceable.
c. of a mineral nature. 33. Which one of the following payroll taxes is not
d. physically extracted in operations. withheld from an employee's wages

27. Intangible assets are the rights and privileges that a. Federal income tax
result from ownership of long-lived assets that b. Federal unemployment tax
c. State income tax
a. must be generated internally. d. FICA tax
b. are depletable natural resources.
c. have been exchanged at a gain. 34. A tax paid equally by the employer and employee is
d. do not have physical substance.
a. federal income tax.
b. federal unemployment tax.
28. Cost allocation of an intangible asset is referred to as c. state unemployment tax.
d. FICA tax.
a. amortization.
b. depletion. 35. The effective federal unemployment tax rate in most
c. accretion. places in the USA is
d. capitalization.
a. 6.2%.
29. Research and development costs b. 0.8%.
c. 5.4%.
a. are classified as intangible assets. d. 8.0%.
b. must be expensed when incurred under
generally accepted accounting principles. 36. Which of the following factors has an impact on the
c. should be included in the cost of the patent amount of Federal Income Tax that is withheld from
an employee
they relate to.
d. are capitalized and then amortized over a
a. Marital Status
period not to exceed 40 years.
b. # of Withholding Allowances
c. Income Bracket
d. All of the Above
30. Which one of the following payroll taxes does not
result in a payroll tax expense for the employer?
37. Which of the following may be described as an
optional deduction
a. FICA tax
b. Federal income tax
a. Medicare Tax
c. Federal unemployment tax
b. Income Tax (Federal or State)
d. State unemployment tax
c. Health Insurance
d. None of the above
AC 11 Quiz #5 (F’06) Suffolk County Community College Prof. Rovegno

38. The record of an employee’s earnings & deductions 45. The amount of earnings subject to Medicare taxes
is called for 2006 is

a. Payroll Register a. $7,000


b. Voucher Register b. $8,500
c. W-2 Form c. $94,200
d. Employee Earnings Record d. entire earnings

39. The employer’s liability for payroll taxes includes all 46. The Social Security (FICA) tax rate for 2006 is
of the following except
a. 5.4%
a. Federal Unemployment Taxes b. 6.2%
b. State Unemployment Taxes c. 0.8%
c. FICA Tax d. 1.45%
d. State Sales & Use Tax
e. Medicare Tax 47. The Medicare tax rate for 2006 is

40. The Federal Income Tax is an example of which of a. 5.4%


the following types of taxes b. 6.2%
c. 0.8%
a. Graduated Tax d. 1.45%
b. Flat Tax
c. Indirect Tax 48. Payroll tax information must be filed quarterly on IRS
d. Double Tax Form

41. Which of the following payroll taxes has an earnings a. W4


cap (ie. Earnings over a certain level is not taxed) b. 941
c. W3
a. Federal Withholding d. W2
b. State Withholding
c. FICA 49. Employers must report each employees’ earnings &
d. Medicare deductions to them on IRS Form

42. The amount of earnings subject to Social Security a. W4


(FICA) tax for 2006 is b. 941
c. W3
a. $7,000 d. W2
b. $8,500
c. $94,200 50. Employers must send copies of all employee
d. entire earnings cumulative earnings and deductions to the IRS. A
summary of the wages & deductions for all
43. The amount of earnings subject to Federal employees is reported to the IRS on Form
unemployment taxes for 2006 is
a. W4
a. $7,000 b. 941
b. $8,500 c. W3
c. $94,200 d. W2
d. entire earnings

44. The amount of earnings subject to NYS


unemployment taxes for 2006 is

a. $7,000
b. $8,500
c. $94,200
d. entire earnings
AC 11 Quiz #5 (F’06) Suffolk County Community College Prof. Rovegno