#1
Which of the following is considered a tangible asset?
Building
ExplanationTangible assets have physical substance, like buildings.
#2
What is the primary objective of asset management?
Maximizing shareholder value
ExplanationAsset management aims to enhance shareholder value.
#3
Which of the following is an intangible asset?
Goodwill
ExplanationIntangible assets lack physical presence, like Goodwill.
#4
Which financial statement would you typically find information about assets?
Balance sheet
ExplanationThe balance sheet provides details on assets, liabilities, and equity.
#5
Which of the following is an example of a current asset?
Accounts receivable
ExplanationCurrent assets include accounts receivable, cash, etc.
#6
Which of the following is NOT a capitalization principle?
Conservatism
ExplanationConservatism is an accounting constraint, not a capitalization principle.
#7
What does the 'matching principle' in capitalization refer to?
Matching revenues with expenses
ExplanationMatching principle aligns revenue and expense recognition.
#8
What is the formula to calculate Return on Assets (ROA)?
Net Income / Average Total Assets
ExplanationROA measures profitability relative to average total assets.
#9
What does the term 'asset turnover ratio' measure?
The efficiency of utilizing assets to generate revenue
ExplanationAsset turnover ratio gauges asset efficiency in revenue generation.
#10
Which of the following is NOT a characteristic of a capital asset?
Used in day-to-day operations
ExplanationCapital assets are not used in day-to-day operations.
#11
Which depreciation method spreads the cost evenly over the useful life of an asset?
Straight-line depreciation
ExplanationStraight-line depreciation evenly allocates costs over an asset's life.
#12
What does the capitalization of interest involve?
Including interest in the cost of acquiring or producing assets
ExplanationCapitalizing interest adds it to the cost of acquiring/producing assets.
#13
What is the purpose of capitalizing interest?
To spread the interest cost over the useful life of an asset
ExplanationCapitalizing interest allocates it over an asset's useful life.
#14
Which of the following depreciation methods results in higher depreciation expense in the earlier years of an asset's life?
Double-declining balance depreciation
ExplanationDouble-declining balance front-loads depreciation in early years.