Bcom sem3|| Higher financial accounting|| IMP MCQ of Property plant and equipment

 

MCQ of  Property plant and equipment 

1.Property, plant and equipment are: 

A.Current assets. 

B.Used in operations. 

C.Natural resources. 

D.Long-term investments.

 ANS:B 

2.Depreciation: 

A.Measures the decline in market value of an asset. 

B.Measures physical deterioration of an asset. 

C.Is the process of allocating to expense the cost of an item of property, plant and equipment. 

D.Is an outflow of cash from the use of an item of property, plant and equipment.

 ANS:C 

3.A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining: 

Ans: 

4.When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated residual value is $1,500. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated residual value. The depreciation expense in year 5 equals:

Ans: 

5.A company used straight-line depreciation for an item of equipment that cost $12,000, had a residual value of $2,000, and had a five-year useful life. After depreciating the asset for three complete years, the residual value was reduced to $1,200 and its total useful life was increased from 5 years to 6 years. Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life: 

Ans:

6.Many companies use an accelerated depreciation method because: 

A.It is required by the tax code. 

B.It is required by financial reporting rules. 

C.It yields larger depreciation expense in the early years of an asset's life. 

D.It yields a higher income in the early years of the asset's useful life. 

ANS:C