47. Which of the following is NOT a class under MACRS for personal property? 

A. 5 year class

B. 7 year class

C. 10 year class

D. 27.5 year class

 

48. Under MACRS, the highest percent—resulting in the highest deprecation expense—occurs during which year? 

A. first

B. second

C. third

D. fourth

 

49. The entry to record the sale of equipment used in a business may include a debit to 

A. the Equipment account.

B. the Gain on Sale of Equipment account.

C. the Accumulated Depreciation—Equipment account.

D. Depreciation Expense account.

 

50. An asset that cost $14,000 was sold for $9,000 cash. Accumulated depreciation on the asset was $7,000. The entry to record this transaction includes the recognition of 

A. a gain of $2,000.

B. a loss of $5,000.

C. neither a gain nor a loss.

D. a loss of $2,000.

 

51. An asset that cost $25,000 was sold for $9,000 cash. Accumulated depreciation on the asset was $16,000. The entry to record this transaction includes the recognition of 

A. a gain of $9,000.

B. a loss of $7,000.

C. neither a gain nor a loss.

D. a loss of $2,000.

 

52. An asset that cost $25,000 was sold for $8,000 cash. Accumulated depreciation on the asset was $16,000. The entry to record this transaction includes the recognition of 

A. a gain of $8,000.

B. a loss of $1,000.

C. neither a gain nor a loss.

D. a gain of $1,000.

 

53. Equipment that cost $20,000 was sold for $12,000 cash. Accumulated depreciation on the asset was $14,000. The entry to record the sale includes a credit to the Equipment account for 

A. $6,000.

B. $12,000.

C. $20,000.

D. $14,000.

 

54. Assume that a business trades in an old cash register for a new one. Under the income tax method, 

A. a gain may be recognized, but a loss cannot be recorded.

B. the cost of the new asset is recorded as the cash paid for the new asset.

C. the asset account is debited for the difference between the original cost of the old asset and the fair market value of the new asset.

D. the cost of the new asset is recorded as the book value of the old asset plus the cash amount paid or to be paid.

 

55. Financial accounting rules (GAAP) and federal income tax rules differ for handling depreciation on the trade-in of an asset. Which of the following is correct?

 

   

A. Option A.

B. Option B.

C. Option C.

D. Option D.

 

56. Which of the following abides by the principle of conservatism regarding trade-ins? 

A. recording only the loss

B. recording only the gain

C. recording both the loss and the gain

D. recording neither the loss nor the gain

 

 



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