Quiz2c - ADM 2340 Autumn 2007 Quiz 2 Name: Student ID: DO...

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ADM 2340 Autumn 2007 Quiz 2 Name: Student ID: DO NOT OPEN THE QUIZ BOOKLET UNTIL TOLD TO DO SO
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Each question is worth 1 point. Choose the most appropriate answer. 1. In 2007, Gamma Company spent $1,800 on the scheduled maintenance (oil change, brake repair, and transmission inspection) of its trucks. Gamma's accountant debited the asset account, Vehicles. Was this treatment an error, and if so, what will be the effect on the financial statements of Gamma in 2007? A) The repair was accounted for correctly. B) The error overstated assets and understated liabilities. C) The error overstated retained earnings and understated expenses. D) The error overstated assets and revenue. 2. A company decided to use the activity method to calculate amortization on a car to be driven by the sales manager. The amount of annual amortization will vary with the A) age of the car. B) balance in accumulated amortization. C) number of miles the car is driven. D) acceleration rate. 3. A machine, acquired on January 1, 2005, for $6,000, is being amortized using the accelerated method. The estimated useful life of the machine is 10 years. The acceleration rate is 1.2. Accumulated amortization at the end of 2006 is: A) $634. B) $1,354. C) $1,440. D) impossible to determine, since the residual value is not given. 4. Martinelli Company recently purchased a truck. The price negotiated with the dealer was $85,000. Martinelli also paid sales tax of $6,000 on the purchase, shipping and preparation costs of $950, and insurance for the first year of operation of $2,000. What amount should be debited to the asset account Vehicles
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Quiz2c - ADM 2340 Autumn 2007 Quiz 2 Name: Student ID: DO...

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