Acct 2101 Financial Accounting

ACCT 2101 Financial Accounting

Sample Exam 4

Part I: Multiple Choice Answers (Please write your multiple choice answers here!)

1. _____ 6. _____

2. _____ 7. _____

3. _____ 8. _____

4. _____ 9. _____

5. _____ 10. _____

This exam has 6 numbered pages. Please be sure yours does.

I. Multiple choices

Choose the one best answer for each of the following questions. Please write your answers in the space provided on the cover page.

1) Which of the following is not considered a part of the cost of equipment purchased for business use?

a. Installation costs

b. Freight costs

c. Cost of trial runs

d. Electricity used by the machine

2) Recording depreciation each period is necessary in accordance with the

a. going concern principle.

b. cost principle.

c. matching principle.

d. asset valuation principle.

3) Grant Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?

a. Revisions in useful life are permitted if approved by the IRS.

b. Retroactive changes must be made to correct previously recorded depreciation.

c. Only future years will be affected by the revision.

d. Both current and future years will be affected by the revision.

4) A gain or loss on disposal of a plant asset is determined by comparing the

a. replacement cost of the asset with the asset's original cost.

b. book