1. The Newbury Company has provided the following information: • Net sales, $100,000; • Net operating income, $40,000; • Net income, $20,000; • Average total assets, $120,000; • Average net fixed assets; $80,000. Fixed Asset Turnover Ratio = Net Sales Average Net Fixed Assets What is Wilson's fixed asset turnover ratio? 

A. 0.83 

B. 1.25 

C. 0.25 

D. 0.50.

2. Which of the following equipment related costs is not put on the balance sheet as part of the cost of an asset? 

A. Equipment installation costs. 

B. Transportation costs associated with the equipment purchase. 

C. Equipment maintenance costs. 

D. The equipment's purchase price. ?

3. Which of the following journal entries is correct for Millbury Company when Millbury issues 10,000 shares of $20 par value common stock and pays $20,000 cash in exchange for a building? The market price of the Illinois stock on the exchange date was $35 per share and the building's book value on the books of the seller was $200,000. 

A. Building 220,000 Cash 20,000 Common Stock 200,000 

B. Building 370,000 Cash 20,000 Common Stock 350,000 

C. Building 370,000 Cash 20,000 Common Stock 200,000 Additional Paid-in Capital 150,000 

D. Building 200,000 Common Stock 200,000

4. Which of the following best describes the objective of depreciation? 

A. To allocate the cost of a tangible asset to the periods in which its use contributes to earning revenue. 

B. To estimate the remaining useful life of the asset. 

C. To report the asset on the balance sheet at the estimated amount for which the asset could be sold on the balance sheet date. 

D. To estimate the current replacement cost of the asset.