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MCQS Accounting




1. Which of the following describes the purpose of depreciation?;a.To reflect the change in replacement cost of the asset.;b.To measure the change in market value of the asset.;c.To allocate the cost of an asset over its useful life.;d. All of the other answers describe the purpose of depreciation.;2. Which of the following statements about depreciation is correct?;a.The depreciation method selected has no impact on net income.;b.The straight-line depreciation method produces higher depreciation expense in the early years of an asset's life.;c.Consistency requires that a company use the same depreciation method for all of its assets.;d.The depreciation method selected has no impact on cash flows.;3. If a company were filing a claim with an insurance company for manufacturing equipment damaged in a flood, what method of valuation for the equipment would be most relevant?;a.Net realizable value;b.Replacement cost;c.Depreciated historical cost;d.Historical cost;4. How is the cash purchase of capital assets reflected in a company's cash flow statement?;a.An outflow in the Operating section.;b.An inflow in the Investing section.;c.Through the annual add back of depreciation expense to net income in the Operating section;d.An outflow in the Investing section;5. If an asset experiences obsolescence and becomes less efficient as time passes, which depreciation method would be most appropriate?;a.Accelerated;b.Usage based;c.Annuity based;d.Straight-line;I think DDBCB. A quick explanation would be great


Paper#81420 | Written in 18-Jul-2015

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