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1. For income statement purposes, depreciation is a variable expense if depreciation method used is:

a. units-of-production.

b. straight-line.

c. sum-of-the-years'-digits.

d. declining-balance.

2. Each year a company has been investing increasingly greater amount in machinery. As there is a large number of small items with relatively similar useful lives, the company has been applying straight-line depreciation at uniform rate to machinery as a group. Ratio of this group's total accumulated depreciation to total cost of machinery has been steadily increasing and now stands at .75 to 1.00. Most probabledescription for this increasing ratio is the

a. company must have been using one of the accelerated methods or depreciation.

b. estimated average life of machinery isles than the actual average useful life.

c. estimated average life of machinery is greater than the actual average useful life.

d. company has been retiring fully depreciated machinery that should have remained in service.

3. white Printing Company finds out that printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should

a. recognize an extraordinary loss for the period.

b. include a credit to the equipment accumulated depreciation account.

c. include a credit to the equipment account.

d. not be made if the equipment is still being used.

4. Depletion expense

a. is genof cost of goods sold.

b. includes tangible equipment costs in the depletion base.

c. excludes intangible development costs from the depletion base.

d. excludes restoration costs from the depletion base.

5. The asset turnover ratio is find outd by dividing:

a. net income by ending total assets.

b. net income average total assets.

c. net sales by ending total assets.

d. net sales by average total assets.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M922568

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