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Depreciation(Quick Test #2)

Author:
Harold Averkamp, CPA, MBA

After you have answered all 20 questions, click "Grade This Quick Test" at the bottom of the page to view your grade and receive feedback on your answers.

Note: Some of the following test questions may not have been covered in the Explanation or Practice Quiz for this topic. For more insight regarding a specific question, use the search box at the top of the page.

    1. 1. When an asset has the same amount of depreciation expense each full year, it is being depreciated under the __________– __________ method.

    2. 2. The cost of the land that is used as the site of a new warehouse should be depreciated.

    3. 3. The entry to record depreciation includes a credit to the account __________ Depreciation.

    4. 4. The depreciation method likely to be used on a company’s financial statements is the __________-line method.

    5. 5. When an asset’s accumulated depreciation becomes equal to the asset’s cost, both amounts are removed from the accounting records even if the asset remains in use.

    6. 6. Depreciation is recorded in the __________ journal.

    7. 7. Each year’s depreciation expense on the income statement is expected to agree with the depreciation expense on the income tax return.

    8. 8. The balance in the account Accumulated Depreciation should be approximately the same as the balance in the account Depreciation Expense.

    9. 9. An asset’s __________ value or carrying value is its cost minus its accumulated depreciation.

    10. Use the following information for answering Questions 10 - 13:
      Equipment having a cost of $10,000 was acquired on July 1, 2023. The equipment is expected to have no salvage value at the end of its useful life of 10 years. The company's accounting year ends on December 31 of each year and the straight-line method of depreciation is used.

    11. 10. The depreciation expense to be reported on the company’s income statement for the year 2023 will be $__________.

    12. 11. The depreciation expense for the year 2024 will be $__________.

    13. 12. The accumulated depreciation at December 31, 2025 will be $__________.

    14. 13. If the equipment is fully depreciated in the year 2033, but is used in the year 2034, the depreciation expense for the year 2034 will be $__________.

    15. 14. Depreciation can be computed on the units of production (or units of activity) instead of years.

    16. 15. The objective of depreciation expense on the financial statements is to allocate the cost of an asset to the accounting periods in which it is used, rather than to provide a current value of the asset.

    17. 16. The book value of a company’s equipment is usually the same as the equipment’s fair market value.

    18. 17. Depreciation is considered to be a noncash expense.

    19. 18. An asset’s annual depreciation is based on estimates.

    20. 19. It is acceptable to charge the entire cost of a $300 machine to expense in its first year instead of depreciating the cost of the machine over its useful life.

    21. 20. A $60,000 cost to repair an existing machine without extending its life or adding additional features should be depreciated instead of immediately debiting the full amount to Repairs Expense.

Any questions left unanswered will be marked incorrect.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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