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Trivia Quiz 1 for Capital Assets & Amortization of Tangible & Intangible Assets

(March 5th, 2010)

This trivia will quiz you on the concepts explained in the article Capital Assets & Amortization of Tangible & Intangible Assets, Cost of Capital Assets, Accounting for Lump Sum Asset Purchases If there is any question you do not understand, it is advised to refer to that page for explanation. After selecting your answers, choose the "Grade Me!" button at the bottom to know your result & the right answers.

1) Capital assets have a useful life of more than _____ accounting period?
a) 1
b) 2
c) 3
d) 4

2) Which of the following is an example of Tangible/Intangible capital assets?
a) Factory Equipment
b) Coca Cola patent
c) Land for future developmen
d) Oil/Natural reserve
e) All of the above

3) Goodwill is an example of an intangible asset?
a) True
b) False
4) Merchandise Inventory is different from a Capital asset in that it is not used in daily business operations of an organization, but rather held for the purpose of resale and to make a profit.
a) True
b) False

5) A corporation that purchases a digital camera for the purpose of resale lists its digital cameras on the _________ section of its ____________.
a) Shareholder's Equity; Balance Sheet
b) Long Term Assets; Balance Shee
c) Inventory; Balance Sheet
d) Current Liabilities; Balance Sheet

6) It is important to note that Capital assets have a useful life of more than 1 accounting period or year which makes them different from “Current Assets” that have a useful life of 1 year or less.
a) True
b) False

7) Which ONE of the following is NOT a step involved in accounting for Capital assets
a) Calculating & accounting for the initial & subsequent costs of capital assets
b) Allocating costs of capital assets against revenues for the periods they benefit
c) Recording the cost of disposing capital assets at the end of their useful lives
d) Recording the costs incurred for insuring the capital assets from theft/damage/fires or natural disasters.

8) Capital assets are always recorded at cost including all normal & reasonable expenses necessary to get the asset in place and ready for its intended purpose.
a) True
b) False

9) Which of the following is an example of reasonable expense incurred to get the capital asset in place and ready for its intended purpose?
a) Invoice cost of purchase
b) Freight cost for receiving the capital assets in to the warehouse
c) Cost of assembly of the asset
d) Unpacking/Storage costs
e) All of the above

10) Expense incurred to electrically wire a capital asset and configuring it to work properly is included in the cost of the capital asset recorded on the balance sheet:
a) True
b) False

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