67.When comparing the units-of-output method of depreciation with straight-line depreciation:
A. The depreciation expense in the first year will always be greater under units-of-output method.
B. The depreciation expense in the first year will always be less under the units-of-output method.
C. The depreciation expense in the first year will always be the same under both the methods.
D. The depreciation expense in the first year may be greater than, equal to, or less under the units-of-output method.
68.The term accumulated depreciation, as used in accounting, is best defined as:
A. The portion of a plant asset recognized as expense since the asset was acquired.
B. Funds (or cash) set aside to replace the asset being depreciated.
C. Earnings retained in the business that will be used to purchase another asset when the present asset is depreciated.
D. An expense of doing business.
69.Which depreciation method is most commonly used among publicly owned corporations?
A. Straight-line.
B. Double-declining balance.
C. Units-of-output.
D. All of the various depreciation methods are used equally.
70.The book value of an asset in the plant and equipment category is:
A. The undepreciated cost of the asset.
B. The current replacement cost of the asset.
C. The original cost of the asset.
D. The accumulated depreciation on the asset to date.
71.In the fixed-percentage-of-declining-balance depreciation method, the book value of the asset is multiplied by:
A. An increasing depreciation rate.
B. A constant depreciation rate.
C. A decreasing depreciation rate.
D. A rate that changes each year but is determined from a table.
72.Which of the following situations is impossible?
A. Book value is greater than residual value.
B. Book value is equal to the residual value.
C. Book value is less than residual value.
D. Book value is less than the original cost.
73.Responsibility for selection of the depreciation methods used in financial reporting rests with:
A. Company management.
B. The FASB.
C. The IRS.
D. The CPA firm that audits the company's financial statements.
74.With respect to depreciation policies, the principle of consistency means:
A. A company should use the same depreciation methods in its financial statements that it uses in its income tax returns.
B. A company should use the same depreciation methods as other companies in the same industry.
C. A company should use the same depreciation method from year to year for a given plant asset.
D. A company should use the same depreciation method in computing depreciation expense on all its assets.
75.The book value of equipment:
A. Increases with the passage of time.
B. Decreases with the passage of time.
C. Remains the same with the passage of time.
D. May increase or decrease depending upon the economy.
76.When a company uses straight-line depreciation and the half-year convention, assets with a five-year life:
A. Will have the same depreciation expense in the first and last years.
B. Will be depreciated over six accounting years.
C. Will have a book value that exceeds its salvage value at the end of its economic life.
D. All of these statements are correct.