Question 1
Which time-based method of depreciation results in the largest total amount of depreciation expense recognized over the entire service life of an asset?

straight line method.

double-declining-balance method.

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

each of the above will result in the same total amount of depreciation expense recognized over the entire service life of an asset.

Question 2
In its 2013 financial statements, Behrend Corp. (a US firm) reports depreciation expense in its income statement of $10,000,000 and reports Property Plant and Equipment (PP&E) in its balance sheet at its book value of $120,000,000. What information does this convey?

the value of Behrend's depreciable assets declined by $10,000,000 during the year.

Behrend's PP&E is worth $120,000,000 on 12/31/13.

all of the above.

none of the above.

Question 3
Which of the following depreciation methods results in periodic depreciation that behaves as a variable cost?

sum-of-the-years'-digits

double declining balance

units-of-output (production)

All of the above

Question 4
One January 1, 2012, the Behrend Corporation purchased a machine at a cost of $55,000. The machine was initially expected to have a service life of 10 years and $5,000 residual value. The straight-line depreciation method was used. In 2014, the total estimated service life of the asset was decreased from 10 years to 7 years, and the estimate of residual value was revised from $5,000 to zero. Depreciation expense for 2014 should be:

$5,000

$10,000

$9,000

none of the above

Question 5
A delivery van that cost $40,000 has an expected service life of four years and a residual value of $4,000. Depreciation for the second year of the asset's life using the sum-of-the-years'-digits method is:

$12,000

$10,800

$9,000

None of the above.

Question 1
If "interest payable" appears as a liability on the balance sheet this indicates:

Interest has been recognized as expense on the income statement that has not been paid.

Interest has been recognized as expense on the income statement that has also been paid.

Interest has been paid that has not yet been recognized as expense on the income statement.

None of the above.

Question 2
Which of the following is true?

If the effective/market interest rate equals the stated interest rate, bonds will have a market value equal to their face value.

If the effective/market interest rate exceeds the stated interest rate, bonds will have a market value less than their face value.

If the effective/market interest rate is less than the stated interest rate, bonds will have a market value greater than their face value.

all of the above

Question 3
If five-year bonds are originally issued at a premium, the pattern of interest expense using the effective interest method recognized over the five-year period:

increases in dollar amount

decreases in dollar amount

is the same dollar amount

Question 4
Under US GAAP, periodic cash interest payments made during the period are reported in the statement of cash flows as a(an):

operating activity.

investing activity.

financing activity.

any of the above at the discretion of management.

Question 5
Which of the following accounts is a liability?

salaries payable

unearned revenue

all of the above

none of the above