Download Chapter 21 Review

Chapter 21 Review
1.
Plant assets decrease in value because of use and the passage of time
2.
Estimated total depreciation expense is calculated as original cost less
estimated salvage value
3.
Current Assets are assets expected to be exchanged for cash or consumed
within a year.
4.
Recording of plant asset for the amount paid for the asset is an application of
Adequate Disclosure
5.
A factor that affects the useful life of a plant assets is the asset’s life.
6.
The original cost of a plant asset includes all costs paid to make the asset
usable to a business.
7.
To record depreciation expense for a fiscal period, the accumulated
depreciation account is credited.
8.
The portion of a plant asset’s cost that is transferred to an expense account in
each fiscal period during a plant asset’s useful lie is depreciation expense.
9.
Loss on plant assets is a loss that results when a plant asset is sold for less
than book value.
10.
Personal property includes buildings and land.
11.
Some examples of plant assets are: computers, cash registers, and display
cases.
12.
Transferring a portion of a plant asset’s cost to an expense in each fiscal
period that a plant asset is used to earn revenue is an application of the
accounting concept Matching Expenses with Revenue
13.
The purpose of recording depreciation is to record an expense in the period in
which the asset is used to earn revenue.
14.
The original cost of a plant asset includes the installation costs.
15.
Generally, a business removes a plant asset from use and disposes of it when
the asset is no longer useable.
16.
Book value of a plant asset is original cost minus accumulated depreciation
17.
When a plant asset is disposed of, a journal entry is recorded that removes the
original cost of the plant asset and its related accumulated depreciation.
18.
If a plant asset costs $1,200.00, has accumulated depreciation of $1,000.00
and is sold for $200.00, the gain or lost on disposal is no gain or loss.
19.
If a plant asset costs $4,000.00, has accumulated depreciation of $3,200.00,
and is sold for $900.00, the gain or loss of disposal is $100.00 gain.
20.
Mastery 21-7 is a great example to study for the test.