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PFR-Test I

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PFR-Test I

Students exam

Uploaded by

gelilalemlemadem043640
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Horn International College

Department of Accounting and Finance


Level III Program

Test I for the Unit of Competency – Prepare Financial Reports Exam Date- January 15, 2024

Time Allowed: 50 Minutes

Part I- TRUE or FALSE (5%)

Instruction: Write the word “TRUE”, if the given statement is correct, if not write the word
“FALSE”. Write your answer on the answer sheet left for this part.

1. An asset is a resource with economic value that an individual, corporation, or country owns or

controls with the expectation that it will provide a future benefit.

2. Fixed assets are short-term economic resources that are expected to be converted into cash or

consumed within one year.

3. Fixed assets are resources with an expected life of less than a year, such as Cash, Supplies, and

Inventories.

4. Financial assets are valued according to the underlying security and market supply and demand.

5. Intangible assets are economic resources that have no physical presence.

Part II- Multiple Choice (10%)

Instruction: Choose the correct letter for each of the following questions and write your answers on
the answer sheet left for this part.

1. What is the amount of depreciation, using the sum- of- years – digits method? For the first year
of use for equipment costing Birr 9,500, with an estimated residual value of Birr 500 and an
estimated life of 3 years.

A. Birr 4,500.00 B. Birr 3,166.67 C. Birr 3000.00 D. Birr 5,400

3. Which depreciation methods that varies with the units produced, with the amount of asset
usage?
A. Units production method B. Sum-of -years digits method
C. Double decline method D. Straight line method
3. Which off the following depreciation method are the most accelerated depreciation method
A. Units of production method B. Sum-0f – years digit method
C. Double decline balance method D. Straight-Line Method

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4. Which one of the following is not considered to be the cost of Land?
A. Title fees B. The cost of leveling C. Broker’s commission D. Material costs
5. Which one of the following is correct paring?
A. Natural Resources VS Amortization Expense B. Plant Assets VS Depletion Expense
C. Intangible Assets VS Depreciation Expense D. Plant Assets VS Depreciation Expense
6. Which one of the following is wrongly stated?
A. Plant assets are valued in the accounts at historical cost.
B. Cost which does not increase usefulness of plant asset should be included in the cost of the
asset
C. Costs which result from carelessness, error in installation or for any other unusual
occurrence should not be included as cost of the plant asset.
D. All of the above
7. One of the following is not included as the cost of building construction?
A. Material costs B. Fees paid to architects, engineers for plans and supervisions
C. Title fees D. Interests incurred to finance the construction
8. Which one of the following is an Intangible Asset?
A. Land B. Gold C. Building D. Patent
9. Which one of the following is an example of Plant Asset?
A. Copy right B. Goodwill C. Furniture and Fixtures D. Crude Oil
10. Which one of the following is correctly Stated?
A. Assets acquired for re-sale in the normal course of business can be characterized as plant
asset.
B. Natural Resources are fixed assets acquired for use in normal business operations and not for
resale.
C. The monetary value of an asset increases over time due to use, wear and tear or obsolescence
is known as depreciation.
D. All plant assets depreciate due to usage, wear or obsolescence for some years in the future.

Part III- Work out question(15%)


Instruction: Correctly work out the following question
Assume you are given the following financial data:
Cost of Plant Asset---------------------------------------------Birr 16,000.00
Estimated Residual Value---------------------------------------Birr 1000.00

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Estimated Useful life of the Plant Asset---------------------5 years

Required:
Determine the annual depreciation cost of the plant asset under the following depreciation
methods
I. The Straight-Line Method
II. The Double-Declining Balance Method
III. The Sum-of-Years digits Method

Answer Sheet
Name_____________________________ID.No.______________Program_____________

Part I-TRUE or FALSE Questions(5%)


1._________________2._______________3.______________4.______________5.______________

Part II-Multiple Choice Questions(10%)


1._______________2.________________3.______________4._____________5.________________
6.______________7._______________8._______________9._____________10.________________

Part III-Work out Question (15%)


I.

II.

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III.

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