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Quiz 9 & 10

Which of the following assets does not decline in service potential over the course of its useful life?

Land

Interest may be included in the acquisition cost of a plant asset

during the construction period of a self-constructed asset.

The balance in the Accumulated Depreciation account represents the

amount charged to expense since the acquisition of the plant asset

In computing depreciation

salvage value is, an estimate of a plant asset's value at the end of its useful life

Which of the following methods will result in the highest depreciation in the first year?

Declining-balance

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

expensed when incurred.

The cost of an intangible asset with an indefinite life should

not be amortized

Plant assets are ordinarily presented in the balance sheet

at cost less accumulated depreciation

A current liability is a debt that can reasonably be expected to be paid

within one year, or the operating cycle, whichever is longer

As interest is recorded on an interest-bearing note

the Interest Expense account is, increased; the Interest Payable account is increased

The amount of sales tax collected by a retail store when making sales is

a current liability

Bonds that may be exchanged for common stock at the option of the bondholders are called

convertible bonds

When authorizing bonds to be issued

the board of directors does not specify the, selling price

If the market rate of interest is greater than the contractual rate of interest

bonds will sell, at a discount

The statement "Bond prices vary inversely with changes in the market rate of interest" means that if the

market rate of interest decreases, then bond prices will go up

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