assets in accounting coursera week 3 quiz answers
PP&E Practice Quiz
1. Select all of the current assets:
- Accounts Receivable
- Cash
- Bottles of Everlasting Summer massage oil for resale
- Massage table
2. Select all of the non-current assets:
- Two acres of land owned for a future office site
- Product patent
- Cost of Goods Sold
- Office space rental
3. Which assets would be considered PP&E?
- Land, buildings, cash
- Salaries, rent, snacks
- Land, buildings, equipment
- Inventory, office supplies, accounts receivables
4. True or false. PP&E and expenses are treated the same when it comes to taxes.
- True
- False
5. If PP&E is miscalculated or entered incorrectly, it mostly impacts:
- Potential investor perception
- Balance sheet
- Analysis of fixed asset spending
- All of the above
Depreciation Quiz
6. True or false: Depreciation is spreading out the expense of an asset over time.
- True
- False
7. True or false: Depreciation expense is recorded on the balance sheet below PP&E.
- True
- False
8. What will the accumulated depreciation of the Float Tank be after 4 years? (Format your answer as $x,xxx, no parenthesis)
Reminder:
Original price: $12,000
$2,000 annual depreciation
$8,000
9. If an asset has a salvage value of $300, that means:
- Its accumulated depreciation is $300.
- It could be sold for $300 at the end of its useful life.
- Its book value is $300.
- It was purchased for $300.
10. When using QBO software, depreciation expense must be entered as a:
- Fixed asset
- Revenue account
- Journal entry
- Check
Equipment Lease Quiz
11. A kind of lease in which ownership of the asset is intended at the end of the lease is called:
- An operating lease
- A capital lease
- A transfer lease
- An equipment lease
12. True or False: A capital lease will show up on the profit and loss statement.
- True
- False
13. In a lease agreement, the party that is paying rent is referred to as the:
- Lessor
- Lessee
- Renter
Property and Equipment Assessment
14. Bill is so excited about opening up his BBQ joint, “Sop ‘n Mop Rib Shack”. He only has a few things left to do before opening day. One task is to sign the lease for his 3 BBQ Smokers that just arrived. He is leasing them from the best BBQ Smoker supplier in town, Smokey’s Pit Boss. The lease is a capital lease with a term of 6 years with 10% interest.
In this example, Bill is considered the _________________ on the lease, and Smokey’s PitBoss is considered the ___________________.
- Financer, Financier
- Party, Exchanger
- Lessor, Lessee
- Lessee, Lessor
15. Bill is so excited about opening up his BBQ joint, “Sop ‘n Mop Rib Shack”. He only has a few things left to do before opening day. One task is to sign the lease for his 3 BBQ Smokers that just arrived. He is leasing them from the best BBQ Smoker supplier in town, Smokey’s Pit Boss. The lease is a capital lease with a term of 6 years with 10% interest.
Since Bill’s lease is a capital lease, this means at the end of the 6 years he _______________________.
- Owns the equipment himself, but may have a buy-out fee.
- Is able to upgrade the smoker’s, since they are now of little value, and continue with a new lease on new equipment.
- Can no longer write off depreciation since he owns the smokers.
- Has to sign another lease with new terms, accounting for the depreciation of the smokers, in order to continue using the equipment.
16. Bill is so excited about opening up his BBQ joint, “Sop ‘n Mop Rib Shack”. He only has a few things left to do before opening day. One task is to sign the lease for his 3 BBQ Smokers that just arrived. He is leasing them from the best BBQ Smoker supplier in town, Smokey’s Pit Boss. The lease is a capital lease with a term of 6 years with 10% interest.
Since Bill’s lease is a capital Lease, all of the following are true except:
- All risks and benefits are transferred to Bill.
- The payments for the smokers are considered an expense, since Bill is paying to lease them.
- Bill is responsible for the insurance, maintenance, and taxes of the smokers.
- Bill can claim the smokers as an asset, as well as account for depreciation of this asset on his balance sheet.
17. Larry Smith purchased equipment for $50,000 on January 1, 2020. Its useful life will be 7 years. What will his yearly Depreciation Expense be assuming straight-line depreciation? (Format your answer as $x,xxx.xx)
$7,142.86
18. On January 1, 2020, Marcy acquired a small bass boat for $10,000 to use as a business expansion for her fishing shop, “Bass and Brim”. Her goal is to offer charters for tourists and new anglers. The boat’s useful life is expected to be 10 years, and the salvage value is expected to be $0. After 4 years of use, it was determined that the boat would be useful for only three more years, meaning that the total useful life of the boat will be 7 years instead of 10. Marcy uses the straight-line method of depreciation.
Based on this information what amount should Marcy list as the Depreciation Expense for 2025? (Format your answer as $x,xxx)
$2,000
19. PP&E are considered which of the following:
- Non-current Assets
- Liabilities
- Inventory
- Current Assets
20. True or False: In order to adhere to the matching principle, depreciation expense is shown on the income statement.
- True
- False
24. The following are true about operating leases except:
- They do not record interest expense.
- They record the lease expense as an operating expense.
- They record interest as an expense.
- They do not record depreciation expense.
25. A lease in which the transfer of ownership is not intended at the end of the lease life is called _________.
- Equipment Lease
- Transfer Lease
- Operating Lease
- Capital Lease
26. When considering the service life of an asset, the estimate is based on all of the following considerations: (Select all that apply)
- How complex the item is (high tech vs low tech).
- The total cost of the item relative to other similar items.
- How often the item will be used.
- How long the item will last relative to other similar items.
27. The party who owns the asset that is being rented or leased is known as ________.
- Capital Lease
- Lease
- Lessee
- Lessor
28. True or False: Some assets return value after their service life.
- True
- False
29. Which of the following are examples of PP&E? (Select all that apply)
- Cash
- Inventory
- A company truck
- Land
30. Sanjay has a food truck, “Pakora”, that specializes in his culture’s cuisine. He is leasing the truck through a capital lease. His original cost was $35,500 and the expected useful life of this vehicle is 8 years.
Using straight line depreciation, what is Sanjay’s annual depreciation on his food truck? (Format your answer as $x,xxx.xx)
$4,437.50
31. Sanjay has a food truck, “Pakora”, that specializes in his culture’s cuisine. He is leasing the truck through a capital lease. His original cost was $35,500 and the expected useful life of this vehicle is 8 years. Calculate his annual depreciation.
What would the book value be of Sanjay’s food truck after 1 year? (Format your answer as $xx,xxx.xx)
$31,062.50
32. For a capital lease, you must include the following journal entries except:
- One entry to record the monthly payment
- One entry to record the initial payment
- One entry to record the lease
- One entry to record the interest alone
33. True or False: Land is considered a noncurrent asset.
- True
- False