The Accounting Process, Part Two - Module 3 of 6


Question 1

Assume Acme Corporation purchases 140 widgets at $6 each and subsequently, another 210 widgets at $8 each. Acme sells 273 widgets and computes its inventory at the end of the fiscal year to be $2,058. What inventory method did Acme use?

Question 2

Acme Corporation’s inventory reflects a cost of $320,000 and a market value of $390,000. How should Acme record its inventory?

Question 3

A fixed asset’s historical cost less any accumulated depreciation is called

Question 4

Acme Corporation intends to use straight-line depreciation to record the value of its newly acquired $800,000 plant, with a salvage value of $200,000 and a useful life of 12 years. Acme will record its annual depreciation amount as

Question 5

Acme Corporation intends to use sum-of-the-years-digits depreciation to record the value of its newly acquired $800,000 plant, with a salvage value of $200,000 and a useful life of 5 years. What depreciation expense will Acme record for the first year of the asset’s useful life?

Question 6

Acme Corporation intends to use double declining balance depreciation at 20% to record the value of its newly acquired $800,000 plant with a useful life of 10 years. What depreciation expense will Acme record for the first year of the asset’s useful life?

Question 7

Acme Corporation intends to use units-of-production depreciation to record the value of its newly acquired $800,000 plant with a salvage value of $200,000. Acme expects the plant to produce 600,000 widgets over the useful life of the plant, with 40,000 produced in the first year of operation. What depreciation expense will Acme record for the first year of the asset’s useful life?

Question 8

The Modified Accelerated Cost Recovery System is a series of tables under the U.S. tax code used to calculate

Question 9

Repairs to fixed assets are normally recorded as

Question 10

A cost that is capitalized is