True-False Place your answers to the left (2 points each) [1] Depreciation is ba

Question

True-False Place your answers to the left (2 points each) [1] Depreciation is based upon cost, useful life and salvage value. 12) Expenditures incurred, such as changing the oil and filter on a delivery truck, would be considered expenses of the period incurred.. 131 41 A patent is the exclusive right to reproduce and sell a book, musical composition, or film. 15] In computing depletion expense, salvage value is not part of the computation. 16) The return on assets and the fixed asset turnover are usually computed monthly 17) A known liability is always classified as a current liability [8 Unearned revenues are typically classified as current liabilities. 191 According to the matching principle, warranty expense is recorded in the same period as the related revenue. The Discount on Bonds Payable account is known as an adjunct account. Limited liability means that the stockholders of a corporation share a personal [10] [11] liability for all debts of the corporation. [12] If a stock has a stated value of $1, this means that the stock sells for $1 per share. [13) When stock is sold for cash, the total paid-in capital should equal the amount of cash received

Explanation / Answer

1.

The statement is true.

Depreciation = (cost – scrap value) / useful life

2.

The statement is true.

Period costs are the costs incurred for the time period and these costs are to be treated as expense, so expenditure incurred such as changing oil and filter are treated as period cost.

These costs does not have significant effect on product.

3.

The statement is false.

Disposal of plant may arise at any point of time irrespective of fully depreciated or not.

4.

The statement is true.

A patent gives the owner of patent an exclusive right against to produce a good, sell.

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