Question : 11.An increase in accumulated depreciation: a.increases total assets. b.decreases total assets. c.decreases the : 1253702

11.An increase in accumulated depreciation:

a.increases total assets.

b.decreases total assets.

c.decreases the current ratio.

d.increases the quick ratio.

12.During extended periods of rising prices of plant and equipment, the amount required to replace long-lived assets is typically:

a.less than total accumulated depreciation of those assets.

b.equal to the sum of all the depreciation recognized on those assets.

c. less than the balance sheet value of those assets.

d. greater than the sum of total depreciation expense recognized on those assets.

13.On January 1, a company purchased land with a usable building on it for $270,000. At the time of purchase, the fair market values of the land and building were $120,000 and $200,000, respectively. The gain from the purchase of the land and building is:

a.$0.

b.$50,000.

c.$80,000.

d.$320,000.

14.Equipment with a cost of $22,000 and accumulated depreciation of $15,000 was retired with a gain of $1,000.  The cash received from the disposition of equipment is:

a.$7,000.

b.$8,000.

c.$6,000.

d.$14,000.

15.Moss Company purchased a building costing $800,000 on January 1, 2010. Moss is depreciating the building over 80 years using the straight-line method with no salvage value. The economic life of the building is expected to be 40 years. As a result of Moss’s accounting procedure, its 2010:

a.earnings per share is understated and debt/equity ratio is overstated.

b.earnings per share is understated and debt/equity ratio is understated.

c.earnings per share is overstated and debt/equity ratio is overstated.

d.earnings per share is overstated and debt/equity ratio is understated.

16.The Favre Company made the following expenditures related to its building:

Annual repainting of exterior

$  1,700

Replacement of old fiberglass shingles with a fireproof tile roof

33,000

Major improvements to electrical system required to run new machinery

18,000

The amount of the preceding expenditures that should be immediately expensed is:

a.$0.

b.$1,700.

c.$34,700.

d.$19,700.

17.Depreciation is an expense that does not use cash during the period in which it is recognized. When did (will) the cash outflow associated with the asset occur?

a.When the asset is retired

b.There is no cash outflow associated with depreciation or the asset.

c.When the replacement cost of the asset increases

d.When the asset was acquired

18.The balance in accumulated depreciation on January 1 and December 31 is $15,000 and $19,000, respectively, during a year in which no assets were disposed. Depreciation expense during the year is:

a.$19,000.

b.$15,000.

c.$4,000.

d.$34,000.

19.On January 1, Comicon Corp. purchased land with a usable building on it for $300,000. At the time of purchase, the fair market values of the land and building were $100,000 and $150,000, respectively. Comicon depreciates the building using the straight-line method over 20 years with an expected $24,000 residual value. The annual depreciation expense on the building is:

a.$0.

b.$5,000.

c.$7,800.

d.$10,800.

20.On January 1, Scion Co. purchased land with a usable building on it for $210,000. At the time of purchase, the fair market values of the land and building were $80,000 and $160,000, respectively. Scion assigned the entire purchase cost of $240,000 to land. Scion should depreciate the building using the straight-line method over 20 years with an expected zero residual value. As a result of Scion’s treatment of the purchase of land and building, its current net income is:

a.understated by $10,500.

b.understated by $7,000.

c.overstated by $7,000.

d.overstated by $10,500.