1. A company purchases a machine for $90,000 with a salvage value of $10,000. The accountant should debit the machine account for $80,000 to record the purchase. True or False

2. Which of the following accounts shows the cost of an asset expensed to date?

a. equipment

b. Allowance for doubtful accounts

c. depreciation expense

d. accumulated depreciation

e. land

3.Tetra Inc. buys equipment on January 1, 2012 for $200,000 with estimated life of 10 years and no salvage. On January 1, 2014, the company sold the equipment for $210,000 and debited cash for that amount, credited equipment for $200,000, and recorded a gain of $10,000. No other entry was made. Which of the following statement is true of Tetra?

	a.The equipment account is understated by $30,000.
	b.The accumulated depreciation account is overstated by $50,000.
	c.The net income of the company is understated by $40,000.
	d.The assets of the company are overstated by $210,000.
	e.The net income of the company is understated by $50,000.

4.Under the double-declining balance method, the net book value of an asset drops when:

	a.the historical cost of the asset drops.
	b.the fair value of the asset decreases.
	c.the depreciation expense remains constant.
	d.the depreciation expense increases.
	e.the depreciation expense decreases.

Answer rating: 100% (QA)

Answer 1 False Explanation As the machine purchased is worth 90000 asse... View the full answer