Acc 557 Final Exam - Strayer

ACC 557 Final Exam - Strayer

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Chapter 9 Through 14

PLANT ASSETS, NATURAL RESOURCES, AND INTANGIBLE ASSETS

CHAPTER LEARNING OBJECTIVES

1. Describe how the historical cost principle applies to plant assets.

2. Explain the concept of depreciation and how to compute it.

3. Distinguish between revenue and capital expenditures, and explain the entries for each.

4. Explain how to account for the disposal of a plant asset.

5. Compute periodic depletion of natural resources.

6. Explain the basic issues related to accounting for intangible assets.

7. Indicate how plant assets, natural resources, and intangible assets are reported.

8. Explain how to account for the exchange of plant assets.

TRUE-FALSE STATEMENTS

1. All plant assets (fixed assets) must be depreciated for accounting purposes.

2. When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account.

3. When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Delivery Equipment.

4. Land improvements are generally charged to the Land account.

5. Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.

6. The book value of a plant asset is always equal to its fair market value.

7. Recording depreciation on plant assets affects the balance sheet and the income statement.

8. The depreciable cost of a plant asset is its original cost minus obsolescence.

9. Recording depreciation each period is an application of the expense recognition principle.

10. The Accumulated Depreciation account represents a cash fund available to replace plant...