29 Jun uestion PA MT HW 3 – MULTIPLE CHOICE AND T/F 100 QUESTIONS T/F AND M/C
uestion
PA MT HW 3 – MULTIPLE CHOICE AND T/F
100 QUESTIONS T/F AND M/C
I-TRUE/FALSE. Write, on the answer sheet above, ‘T’ if the statement is true and ‘F’ if the statement is false.
II- For the Multiple choice questions, please select the letter that better answers the question and write it
answer sheet.
1) The cost of razing a building on a parcel of land to build a new building is added to the cost of the
land.
2) Treating a cost which should be an expense as a capital expenditure will make a company’s net
income higher.
3) Expenditures which extend the life of an asset or increase its productive capacity should be
expensed.
4) Normal expenditures for repairs and maintenance should be capitalized.
5) Which of the following is included in the cost of land?
A) The cost of paving B) The cost of fencing C) The cost of outdoor lighting D) The cost of clearing the land
6) The cost of excavating a basement for a new building is added to the price of the land.
7) The cost of land includes the cost of removing unwanted buildings.
8) An asset impairment will be reflected by an increase in the book value of an asset, as shown on the
balance sheet.
9) A loss on the sale of a plant asset is recorded when the sales price exceeds the book value.
10) Which of the following items should be depleted?
A) Intangible property B) Natural resources C) Land D) Tangible property, plant, and equipment, other than land
11) Which of the following is the expense resulting from a decline in the utility of a natural resource?
A) Obsolescence B) Depreciation C) Depletion D) Amortization
12) Which of the following accounting methods is the method used to compute depletion?
A) Units-of-production B) Straight-line C) First-In, First-Out D) Declining-balance
13) Navajo Mining Company purchased a mine in 2013 for $3,400,000. It was estimated that the mine
contained 200,000 tons of ore and that the mine would be worthless after all of the ore was
extracted. The company extracted 25,000 tons of ore in 2013 and 30,000 tons of ore in 2014.
What is depletion expense for 2013?
A) $425,000 B) $510,000 C) $340,000 D) $680,000
14) Which would NOT be accounted for by the depletion method?
A) Oil reserves B) Coal reserves C) Land D) Timber reserves
15) A mine is purchased for $4,000,000. There will be a salvage value of $300,000 when the land is
restored after mining is completed. The mine has an estimated 250,000 tons of coal. What is the
depletable cost per ton of coal?
A) $13.33
B) $14.80
C) $16.00
D) Cannot be determined from given information
16) Depletion would be used for all of the following EXCEPT:
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