Dallol Technology & Business College

Accounting , Level –IV ,Test -1

Name ID NO.

Part –One: Write ‘’True” if the statement is Correct and ‘’False” if it is incorrect (5 Pts.)

1. Accelerated depreciation methods increase expense realization in the short term, which results in lower net income in
the early depreciation periods of the asset.
2. Book value is equal to the original cost of the asset minus the current balance in accumulated Depreciation.
3. A patent is an exclusive right to a published work such as a song, film, or painting.
4. Declining-balance depreciation will be lower than straight-line depreciation in earlier years, but higher in later years.
5. Depreciation in accounting is the process of allocating to expense the cost of tangible assets over its service life.

Part- Two: Choose the Correct Answer from the given Alternatives (9 Pts.)

1. Accumulated Depreciation
A. Is used to show the amount of cost expiration of intangibles
B. Is the same as Depreciation Expense
C. Is used to show the amount of cost expiration of natural resources
D. Is a contra asset
2. Copyrights are reported on the balance sheet in the:
A. Current assets section C. Intangible assets section
B. Plant assets section D. Investment section

3. Which of the following costs would not be included in the cost of the equipment?
A. Installation B. Insurance C. Freight D. Testing
4. Which one of the following statement is not correct about the distinction between journal and ledger?
A. Journal is a book of prime entry, whereas ledger is a book of final entry.
B. Transactions are recorded daily in the journal, whereas posting in the ledger is made periodically.
C. Recording of transactions in the journal is called journalizing and recording of transactions in the ledger is called posting.
D. Narration is written after each entry in the journal and in the ledger.
5. Contains accounts of all customers to whom goods have been sold on credit.
A. General ledger B. Debtors’ ledger C. Creditors’ ledger D. None
6. Investments are temporary & are made from excess funds that you do not immediately
need to conduct operations.
A. Cash B. Marketable securities C. Plant assets D. Prepaid Expenses
7. In the double – declining balance method of depreciation is not used in the calculation of
annual depreciation until the last year.
A. Estimated useful life C. Residual Value
B. Accumulated depreciation D. Acquisition cost

Prepared by: Nahusenay A. Page 1