Question Details

Expenditures that maintain the operating efficiency 



1.	Expenditures that maintain the operating efficiency and expected productive life of a capital asset are generally
		a.	expensed when incurred.
		b.	capitalized as a part of the cost of the asset.
		c.	debited to the Accumulated Amortization account.
		d.	not recorded until they become material in amount.

	2.	Which of the following is not true of ordinary repairs?
		a.	They primarily benefit the current accounting period.
		b.	They can be referred to as operating expenditures.
		c.	They maintain the expected productive life of the asset.
		d.	They increase the productive capacity of the asset.

	3.	The paneling of the body of an open pickup truck would be classified as a(n)
		a.	operating expenditure.
		b.	addition.
		c.	renovation.
		d.	ordinary repair.
	
4.	Additions and improvements
		a.	occur frequently during the ownership of a capital asset.
		b.	normally involve immaterial expenditures.
		c.	increase the net book value of capital assets when incurred.
		d.	typically only benefit the current accounting period.

	5.	A gain or loss on disposal of a capital asset is determined by comparing the
		a.	replacement cost of the asset with the asset's original cost.
		b.	net book value of the asset with the asset's original cost.
		c.	original cost of the asset with the proceeds received from its sale.
		d.	net book value of the asset with the proceeds received from its sale.




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