Assets in Accounting Coursera Quiz Answers

Get Assets in Accounting Coursera Quiz Answers

In this second course, you will dive deeper into the world of bookkeeping and focus on accounting for assets. If you are familiar with bookkeeping basics, such as double entry accounting, you are ready for this course.

You will gain an understanding of common asset types, learn how to account for inventory, calculate cost of goods sold, and work with Property, Plant, and Equipment (PP&E). Upon completing this course, you will use your new knowledge of assets to record transactions and produce financial statements for increasingly complex business situations.

By the end of this course, you will be able to: -Summarize the common types of assets a business may have -Describe the importance of control over inventory -Outline how depreciation expense is reported on an income statement -Illustrate how transactions can be recorded in terms of the resulting change in the elements of the accounting equation. Course 1 Bookkeeper Basics, or the equivalent, is a recommended prerequisite for this course.

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Assets in Accounting Week 01 Quiz Answers

Quiz : Categorize These Assets

Q1. Which of these would be considered a current asset? (select all) 

  • Accounts receivable 
  • Prepaid expenses
  • Accumulated depreciation
  • Vehicle

Q2. How would you categorize $3,500 worth of computer equipment that the business will use as part of its operations?

  • Current assets
  • Long-term assets
  • Equity

Assets Practice Quiz

Q1. To book Prepaid Expenses, you must be using which type of accounting method?

  • C​ash
  • A​ccrual

Q2. Rent for Eternal Summer is $1,200/month, but if it is prepaid, rent is only $12,000 for the year. If Eternal Summer pays $12,000 on January 1, how would you book this transaction? 

AccountDebitCredit
C​ash
P​repaid rent
  • D​ebit Cash for $12,000 and Credit Prepaid rent for $12,000.
  • D​ebit Prepaid rent for $12,000 and Credit Cash rent for $12,000.

Q3. What happens on Feb 1? 1/12 ($1,000) of the $12,000 Prepaid rent has been “used up” or realized as an expense during January. 

So we need to _____ Prepaid rent (asset account) and _____ Rental expense (expense account) 

  • D​ebit, Credit
  • C​redit, Debit

Q4. What would the balance in the Prepaid rent account be on May 1? 

  • $1​1,000
  • $1​0,000
  • $9,000
  • $8,000

Q5. If we run a Profit & Loss (or Income Statement) for Eternal Summer at the end of April, which of these would appear on the statement?

  • R​ental Expense $1,000.
  • P​repaid rent $8,000.

Q6. If we create a Balance Sheet for Eternal Summer on April 30, which of these would appear on the statement? 

  • Rental Expense $1,000
  • Prepaid Rent $8,000 

Q7. Which of these would be considered a current asset? (select all that apply)

  • Accounts receivable
  • Prepaid expenses
  • Accumulated depreciation
  • Vehicle

Q8. How would you categorize $3,500 worth of computer equipment that the business will use as part of its operations? 

  • Current assets
  • Long-term assets
  • Equity

Q9. Use the balance sheet pictured to answer the following question.​

B​alance Sheet

Current assetsAmount
​ Cash$​2,500
​ Accounts receivable$​400
​ Inventory$​400
​ Prepaid rent$​10,000
L​ong-term assets
​ Equipment$​3,900
​ Vehicle$​25,000
​ Accumulated depreciation-​$2,500
​ Furniture$​2,200
​ Computers$2,600
T​otal Assets$​44,500

If Eternal Summer purchased $500 worth of Inventory using Cash, what would the total assets be after the transaction?

  • $​44,000
  • $​44,500
  • $​45,000

Q10. Use the balance sheet pictured to answer the following question.​

B​alance Sheet

Current assetsAmount
​ Cash$​2,500
​ Accounts receivable$​400
​ Inventory$​400
​ Prepaid rent$​10,000
L​ong-term assets
​ Equipment$​3,900
​ Vehicle$​25,000
​ Accumulated depreciation-​$2,500
​ Furniture$​2,200
​ Computers$2,600
T​otal Assets$​44,500

If Eternal Summer purchased $500 worth of Inventory using their supplier credit line, what would the total assets be after the transaction? 

  • $​44,000
  • $​44,5000
  • $​45,000

Q11. Use the balance sheet pictured to answer the following question.​

B​alance Sheet

Current assetsAmount
​ Cash$​2,500
​ Accounts receivable$​400
​ Inventory$​400
​ Prepaid rent$​10,000
L​ong-term assets
​ Equipment$​3,900
​ Vehicle$​25,000
​ Accumulated depreciation-​$2,500
​ Furniture$​2,200
​ Computers$2,600
T​otal Assets$​44,500

If the accumulated depreciation for Eternal Summer’s mobile massage van increases to $3,000, what would the Total Assets balance be after this entry?

  • $​44,000
  • $​44,500
  • $​45,000

Sales Practice Quiz

Q1. Which path would you select in QuickBooks Online to create a sales receipt? 

  • New > Invoice
  • New > Receive payments
  • New > Sales receipt
  • New > Pay bills

Q2. Which piece of information is not mandatory to record a sales receipt? 

  • Cost of items purchased
  • Items sold
  • Customer name
  • Payment method

Q3. Which account keeps a record of payments in QuickBooks until you physically deposit the same payments at your real-life bank?  

  • Accounts receivable
  • Accounts payable
  • Undeposited funds
  • Petty cash

Q4. When creating an invoice in QuickBooks Online, which path would you choose to add a new customer? 

  • Start > New 
  • You don’t have to add customer information
  • Customer > Add New
  • Save and Send > End

Q5. Sophia does a guest lecture on small business marketing at the Conference of Marketing to Scale. She invoiced the organizers for $200 and their check just arrived in the mail. 

To record the payment, which path would you select in QuickBooks Online?

  • New > Pay bills
  • New > Sales receipt
  • New > Receive payments
  • New > Invoice

Q6. When you record a sales receipt or invoice payment for $500, the accounting software will automatically credit the relevant  __________ by $500. 

  • Revenue account
  • Expense account
  • Liability account
  • None of these

Promissory Notes Practice Quiz

Q1. In bookkeeping, a signed agreement between two parties, used to document money owed, interest, and payment timeframe is known as what? 

  • Bad Debt 
  • General Ledger
  • Notes Receivable
  • Promissory Note

Q2. True or False. The Direct Write-Off method of accounting for “Bad Debt” adheres to the matching principle. 

  • T​rue
  • F​alse

Q3. Notes Receivable is money that is owed to that company and is therefore classified as  ______? 

  • L​iability
  • A​sset
  • E​quity

Quiz : Accounting Concepts and Measurement Assessment

Q1. True or False. An accumulated depreciation account is considered an account with a natural credit balance, meaning the account increases with debits and decreases with credits. 

  • F​alse
  • T​rue

Q2. Suzie Santo owns “Chiquita Chihuahua”, a boutique pet supplies store with customized canine offerings. She has a vendor, “Paws Free”, that supplies her with high-end carrying cases for small dogs. Suzie ordered $8000 worth of cases for the upcoming travel season on credit, but didn’t plan on a pandemic shutting down all travel and not to mention her business for 6 months. She contacts Ricky at “Paws Free” to work out an arrangement to settle her account. What type of document is used for this type of agreement?   

  • Trial Balance 
  • Notes Receivable 
  • Promissory note
  • Notes Payable 

Q3. Suzie agrees to pay Ricky the $8,000 in 2 months, at 15% interest. Which of the following is the most accurate way Ricky and Suzie should record this event on each of their balance sheets?

  • Ricky will record the balance as a Notes Receivable and Suzie will list the $8,000 as a Notes Payable.
  • Ricky will record $9,200 as a Notes Receivable, Suzie will record $9,200 as a Notes Payable.
  • Ricky will add $9,200 as a Cash deposit, and Suzie will record $9,200 as a Notes Payable.
  • Ricky will add $8,000 as a Notes Payable and Suzie will add $8,000 as a Notes Receivable.

Q4. Continuing with our example, would Ricky’s notation on the balance sheet fall under the asset or liabilities column?

  • A​sset
  • Liability

Q5. Would Suzie record this transaction as an asset or a liability on her balance sheet? 

  • L​iability
  • A​sset

Q6. S​uzie has agreed to pay Ricky back the outstanding balance of $8,000 over the course of 2 months at 15% interest, and have both signed the promissory note.  

Which of the following is the best example of how Ricky should initially record this in his General Journal? 

Converting Suzie’s Account to NoteDebitCredit
N​otes receivable$8,​000
A​ccounts receivable$8,000
Converting Suzie’s Account to NoteDebitCredit
N​otes receivable$8,​000
A​ccounts receivable$8,000
Converting Suzie’s Account to NoteDebitCredit
Accounts receivable$8,​000
Notes receivable$8,​000
Converting Suzie’s Account to NoteDebitCredit
Cash$8,​000
A​ccounts receivable$8,​000

Q7. Suzie is ready to make her first payment to Ricky. She is planning on paying $4000 plus her accrued interest.   

Using the formula Principal X Interest X 30/365, what would Suzie’s total first payment be? 

(​Enter the full amount as $XXX.XX)

Q8. Suzie is ready to make her second and final payment of $4,000 plus interest to Ricky.   

Using the formula Principal X Interest X 30/365, what would Suzie’s total second and final payment be? 

Q9. Which Promissory Note component would be entered in section [ 3 ] of the statement below?

I​, [_1_], agree to pay [_2_] the following amount of [_3_] with interest at [_4_], by [_5_].

  • Principal Value
  • Stated Interest
  • Maker
  • Payee
  • Time Frame

Q10. Which Promissory Note component would be entered in section [ 1 ] of the statement below?

I​, [_1_], agree to pay [_2_] the following amount of [_3_] with interest at [_4_], by [_5_].

  • P​rincipal Value
  • M​aker
  • T​ime Frame
  • P​ayee
  • S​tated Interest

Q11. Which Promissory Note component would be entered in section [ 5 ] of the statement below?

I​, [_1_], agree to pay [_2_] the following amount of [_3_] with interest at [_4_], by [_5_].

  • Time frame
  • M​aker
  • Payee
  • Stated Interest
  • Principal Value

Q12. Katie runs an ice cream shop called “Cream and Cone,” and has made her mark by selling flavored sugar cones to enhance her customers’ enjoyment of all the unique flavors of ice cream. She notices that her Maple-Bacon sugar cone is a hot item, especially when paired with a scoop of Bourbon-Butter Pecan. She has decided to trademark this signature cone and use it as her brand’s star item. She’s calling it her ‘Maple-Bacon Bourbon Blast’. Her new trademark is considered what kind of asset? 

  • Intangible
  • Current 
  • Tangible
  • Non-current

Q13. Roger owns a food delivery service that uses couriers on electric skateboards to deliver locally in the business district. His skateboards which are valued at $2,700 are considered which of the following?

  • Bad Debt
  • Long-term asset
  • Equipment
  • Current asset

Q14. Which of the following is correct?

  • Total Assets + Total Liabilities = Total Equity
  • Total Assets = Total Liabilities + Total Equity
  • Total Equity – Total Liabilities = Total Assets 
  • Total Liabilities – Total Assets = Total Equity 

Q15. True or False. A prepaid expense such as prepaid rent or insurance is initially classified as a liability.

  • F​alse
  • T​rue

Q16. A copyright is an example of what type of asset? 

  • Tangible asset
  • Intangible asset
  • Current asset
  • Long term asset 

Q17. What do bookkeepers do when they don’t know how to book something? Select all that apply.

  • They ask for help from a best friend.
  • They research online.
  • They ask the business owner for more clarification. 
  • They ask a fellow bookkeeper or accountant. 
  • They make their best guess based on the information they have. 

Q18. True or False. The Direct Write-Off Method adheres to the matching principle because it lets businesses write off debt that is believed to be uncollectible

  • F​alse
  • T​rue

Q19. When a customer purchases something by cash or check, before it’s deposited into the bank, which account should it be entered into? 

  • Petty Cash
  • Accounts Receivable 
  • Undeposited Funds
  • Inventory

Q20. I​f a customer or vendor buys something on credit, but hasn’t made a payment in over 30 days, which receivable account should be used? 

  • “Doubtful” Receivable
  • Accounts Receivable
  • Accounts Uncollectible
  • “​Aging” Receivable

Assets in Accounting Week 02 Quiz Answers

Merchandise Inventory Quiz

Q1. The goods held by a business with the intent to sell to customers to earn revenue is defined as

  • Manufacturing inventory
  • Merchandising inventory
  • Warehouse inventory

Q2. True or false. A perpetual inventory system is one that updates the inventory account at specified intervals.

  • T​rue
  • F​alse

Q3. The inventory cost flow assumption which supposes that inventory flows through the system from oldest to newest is defined as what assumption?

  • First In, First Out (FIFO)
  • Last In, First Out (LIFO)

Costing Methods Quiz

Q1. When raw materials are purchased, the entry is a ____ to raw materials and a _____ to accounts payable or cash. 

  • Credit; Debit
  • Debit; Credit

Q2. The average cost is reached by dividing the total _____ of goods by the total ____ of goods over a specific accounting cycle. 

  • Cost; Number
  • Number; Cost

Q3. True or False: With the average costing method, we can find the average cost of making a finished good and it doesn’t matter the individual costs of the raw materials. 

  • T​rue
  • F​alse

Inventory Errors Quiz

Q1. If an inventory error overstates the beginning inventory, which of the following is true?

  • The cost of goods sold will be understated and the net income will be overstated.
  • The cost of goods sold will be overstated and the net income will be overstated.
  • The cost of goods sold will be understated and the net income will be understated.
  • The cost of goods sold will be overstated and the net income will be understated.

Q2. On a balance sheet, which of the following is not affected by an inventory error?

  • Assets
  • Liabilities
  • Equity

Q3. True or false. Inventory errors will self-correct after two years (assuming no other errors occur).

  • True
  • False

Quiz : Inventory Accounting Methods Assessment

Q1. The following is true of inventory in a merchandise business.

Select all that apply. 

  • It is considered an asset on the balance sheet
  • When sold, there should always be two journal entries. 
  • It is raw materials used to create a finished product 

Q2. T​rue or false. Because of the cost principle, inventory is reported on the balance sheet at its selling price, not at what it cost to purchase the merchandise. 

  • T​rue
  • F​alse

Q3. Where is the value of a raw material tracked? 

  • Deferred revenue
  • Inventory sub-account
  • Equipment
  • Inventory general category 

Q4. Inventory errors will affect all of the following except: 

  • Balance Sheet
  • Other accrued liabilities
  • Income Statement
  • The following month’s books 

Q5. School’s back in session and Stan at ‘The Bizzy Bee’ has sold 85 of his Fidget Bands this week alone and at the end of September, he had sold 142 total. He purchased 500 of them in August at $1,200 including shipping, and he is selling them for $12.99 each.   

What is the purchase cost (or inventory value cost) for those 500 units before any sales?

Q6. School’s back in session and Stan at ‘The Bizzy Bee’ has sold 85 of his Fidget Bands this week alone and at the end of September, he had sold 142 total. He purchased 500 of them in August at $1,200 including shipping, and he is selling them for $12.99 each.  

Where would Stan record the 85 Fidget Bands he sold this week?

  • As a credit on his journal under the cost of goods sold income account.​
  • There is not enough information to answer this question.
  • He needs to record the total sale on both the income statement and balance sheet as revenue.​
  • As a credit on his journal under the cost of goods sold expense account.​

Q7. School’s back in session and Stan at ‘The Bizzy Bee’ has sold 85 of his Fidget Bands this week alone and at the end of September, he had sold 142 total. He purchased 500 of them in August at $1,200 including shipping, and he is selling them for $12.99 each. 

What is Stan’s gross revenue from the sale of his 142 Fidget Bands? 

Q8. School’s back in session and Stan at ‘The Bizzy Bee’ has sold 85 of his Fidget Bands this week alone and at the end of September, he had sold 142 total. He purchased 500 of them in August at $1,200 including shipping, and he is selling them for $12.99 each.  

What is Stan’s COGS for those 142 Fidget Bands?

Q9. School’s back in session and Stan at ‘The Bizzy Bee’ has sold 85 of his Fidget Bands this week alone and at the end of September, he had sold 142 total. He purchased 500 of them in August at $1,200 including shipping, and he is selling them for $12.99 each.  

What is the gross profit on Stan’s income statement for the sale of those 142 Fidget Bands? Remember Revenue – COGS = Gross Profit 

Q10. When you buy raw materials, and record the purchase of those materials, this entry is a ________________ to raw materials inventory, and a ____________________ to cash or accounts payable. 

  • Debit, Credit
  • Notes Payable, Equipment
  • Equipment, Notes Payable
  • Credit, Debit 

Q11. Sarah is the owner of “Pish-Posh,” a bath shoppe with specialty candles, soaps, and bath bombs. She has decided to utilize the average costing method to calculate her raw inventory value. Looking at the ingredient list below and using the average costing formula, what would be the average cost per ounce to make her bath bombs? 

4​ oz cornstarch$​1.05
4​ oz citric acid$​2.35
4​ oz Epsom salt$​2.15
8​ oz baking soda$​1.85
1​ oz Mica powder$​3.25
1 ​oz essential oil$​4.45
1 oz coconut oil$3.15

Q12. “Leaps and Bounds” is a seller and installer of funky playground equipment. At the beginning of 2019, they had a total of $105,000 of inventory (mostly tire swings, jungle gyms, and suspension bridges). During the year they purchased $60,000 worth of additional inventory (towers and zip lines). At the end of the year, they had a $3,500 inventory balance. What was their cost of goods sold? 

Q13. I​n order to better keep track of their inventory levels, “Leaps and Bounds” has also just switched from an inventory monitoring system that updates every quarter, to one that updates every week. This kind of system is called ________? 

  • Periodic System
  • Pervasive System
  • Proposed System
  • Perpetual System

Q14. Emily is the owner and operator of “Wine Not”, a wine shop for those who like to try wines from lesser-known vintners. She has grown in popularity with her weekly “Wine-down Wednesdays” tastings and inventory is a consistent worry for her. As Emily’s bookkeeper, you have to ensure that her inventory levels are accurately accounted for at the beginning and end of each month.  

In March, she ended with a total of 350 bottles with an average cost of $15.00 each. In April, she ordered a total of 150 bottles with an average cost of $17.00 each. During the month of April, she sold a total of 225 bottles with an average cost of $25.00 each. 

What is the opening inventory value for April? 

Q15. Emily is the owner and operator of “Wine Not”, a wine shop for those who like to try wines from lesser-known vintners. She has grown in popularity with her weekly “Wine-down Wednesdays” tastings and inventory is a consistent worry for her. As Emily’s bookkeeper, you have to ensure that her inventory levels are accurately accounted for at the beginning and end of each month.  

In March, she ended with a total of 350 bottles with an average cost of $15.00 each. In April, she ordered a total of 150 bottles with an average cost of $17.00 each. During the month of April, she sold a total of 225 bottles with an average cost of $25.00 each. 

What were the additional inventory values for April? 

Q16. Emily is the owner and operator of “Wine Not”, a wine shop for those who like to try wines from lesser-known vintners. She has grown in popularity with her weekly “Wine-down Wednesdays” tastings and inventory is a consistent worry for her. As Emily’s bookkeeper, you have to ensure that her inventory levels are accurately accounted for at the beginning and end of each month.  

In March, she ended with a total of 350 bottles with an average cost of $15.00 each. In April, she ordered a total of 150 bottles with an average cost of $17.00 each.  During the month of April, she sold a total of 225 bottles with an average cost of $25.00 each.  

What was the cost of goods available for sale in April? 

Q17. Emily is the owner and operator of “Wine Not”, a wine shop for those who like to try wines from lesser-known vintners. She has grown in popularity with her weekly “Wine-down Wednesdays” tastings and inventory is a consistent worry for her. As Emily’s bookkeeper, you have to ensure that her inventory levels are accurately accounted for at the beginning and end of each month.  

In March, she ended with a total of 350 bottles with a cost of $15.00 each. In April, she ordered a total of 150 bottles with a cost of $17.00 each.  During the month of April, she sold a total of 225 bottles with an average cost of $25.00 each.  

What was the cost of goods sold in April? 

Q18. Emily is the owner and operator of “Wine Not”, a wine shop for those who like to try wines from lesser-known vintners. She has grown in popularity with her weekly “Wine-down Wednesdays” tastings and inventory is a consistent worry for her. As Emily’s bookkeeper, you have to ensure that her inventory levels are accurately accounted for at the beginning and end of each month.  

In March, she ended with a total of 350 bottles with a cost of $15.00 each. In April, she ordered a total of 150 bottles with a cost of $17.00 each.  During the month of April, she sold a total of 225 bottles with an average cost of $25.00 each.  

What was the closing inventory in April/opening inventory for May? 

Q19. When raw materials are used to create a final product, that product becomes a finished good. When that good is sold, the journal entry includes _______________ and ______________________.

Select all that apply.

  • Credit to cost of goods sold, Debit of inventory (finished goods)
  • Debit to cost of goods sold, Credit to inventory (finished goods) 
  • Credit to cash/accounts receivable, Debit to sales income
  • Debit to cash/accounts receivable, Credit to sales income 

Q20. To correct inventory errors, a bookkeeper needs to do all of the following except which of the following? (select the best answer) 

  • Create a reverse journal entry
  • Correct the errors by erasing the old journal entries and make sure the numbers are correct moving forward
  • Create new financial reports pertaining to the affected periods
  • Include a disclaimer explaining why new financial reports are being run

Assets in Accounting Week 03 Quiz Answers

PP&E Practice Quiz

Q1. Select all of the current assets:

  • Accounts Receivable
  • Bottles of Everlasting Summer massage oil for resale
  • Cash
  • Massage table

Q2. Select all of the non-current assets:

  • Two acres of land owned for a future office site
  • Office space rental
  • Cost of Goods Sold
  • Product patent

Q3. Which assets would be considered PP&E?

  • Land, buildings, equipment
  • Land, buildings, cash
  • Salaries, rent, snacks
  • Inventory, office supplies, accounts receivables

Q4. True or false. PP&E and expenses are treated the same when it comes to taxes.

  • True
  • False.

Q5. If PP&E is miscalculated or entered incorrectly, it mostly impacts:

  • Potential investor perception
  • Balance sheet
  • Analysis of fixed asset spending
  • All of the above

Depreciation Quiz

Q1. True or false: Depreciation expense is recorded on the balance sheet below PP&E.

  • T​rue
  • F​alse

Q2. True or false: When adding a fixed asset account in QuickBooks Online, you should check the box to track depreciation.

  • T​rue
  • F​alse

Q3. What will the accumulated depreciation of the Float Tank be after 4 years? 

Reminder: 

Original price: $12,000 

$2,000 annual depreciation 

Q4. If an asset has a salvage value of $300, that means:

  • Its book value is $300.
  • It was purchased for $300.
  • Its accumulated depreciation is $300.
  • It could be sold for $300 at the end of its useful life.

Q5. When using QBO software, depreciation expense must be entered as a: 

  • Fixed asset
  • Revenue account
  • Journal entry
  • Check

Quiz : Property and Equipment Assessment

Q1. Bill is so excited about opening up his BBQ joint, “Sop ‘n Mop Rib Shack”. He only has a few things left to do before opening day. One task is to sign the lease for his 3 BBQ Smokers that just arrived. He is leasing them from the best BBQ Smoker supplier in town, Smokey’s Pit Boss. The lease is a capital lease with a term of 6 years with 10% interest.

In this example, Bill is considered the _________________ on the lease, and Smokey’s PitBoss is considered the ___________________.

  • Lessor, Lessee
  • Financer, Financier
  • Lessee, Lessor
  • Party, Exchanger

Q2. Bill is so excited about opening up his BBQ joint, “Sop ‘n Mop Rib Shack”. He only has a few things left to do before opening day. One task is to sign the lease for his 3 BBQ Smokers that just arrived. He is leasing them from the best BBQ Smoker supplier in town, Smokey’s Pit Boss. The lease is a capital lease with a term of 6 years with 10% interest.  

Since Bill’s lease is a capital lease, this means at the end of the 6 years he _______________________. 

  • Own the equipment himself.
  • Is able to upgrade the smoker’s, since they are now of little value, and continue with a new lease on new equipment.
  • Has to sign another lease with new terms, accounting for the depreciation of the smokers, in order to continue using the equipment.
  • Has to negotiate a buy-out for the remaining balance owed to own the smokers.​

Q3. Bill is so excited about opening up his BBQ joint, “Sop ‘n Mop Rib Shack”. He only has a few things left to do before opening day. One task is to sign the lease for his 3 BBQ Smokers that just arrived. He is leasing them from the best BBQ Smoker supplier in town, Smokey’s Pit Boss. The lease is a capital lease with a term of 6 years with 10% interest. 

Since Bill’s lease is a capital Lease, all of the following are true except: 

  • Bill can claim the smokers as an asset, as well as account for depreciation of this asset on his balance sheet.
  • All risks and benefits are transferred to Bill.​
  • The smokers are considered a liability under accounts payable, since Bill is paying for them over time.
  • Bill is responsible for the insurance, maintenance, and taxes of the smokers.

Q4. Larry Smith purchased equipment for $50,000 on January 1, 2020. He believes that the equipment will have a salvage value of $2,000 and its useful life will be 7 years. What will his yearly Depreciation Expense be assuming straight-line depreciation? 

Q5. On January 1, 2020, Marcy acquired a small bass boat for $10,000 to use as a business expansion for her fishing shop, “Bass and Brim”. Her goal is to offer charters for tourists and new anglers. The boat’s useful life is expected to be 10 years, and the salvage value is expected to be $0. After 4 years of use, it was determined that the boat would be useful for only three more years, meaning that the total useful life of the boat will be 7 years instead of 10. Marcy uses the straight-line method of depreciation.   

Based on this information what amount should Marcy list as the Depreciation Expense for 2025?

Q6. PP&E are considered which of the following: 

  • Current Assets
  • Inventory
  • Liabilities
  • Non-current Assets

Q7. True or False: In order to adhere to the matching principle, depreciation expense is shown on the income statement. 

  • F​alse
  • T​rue

Q8. Gavin is the owner of ‘Single Track’, a mountain and dirt biking park. He has decided to try and get more riders in the winter snow season and has purchased 10 fat-tire bikes. He paid $14,345 for the bikes themselves, 7% sales tax, $1,200 delivery fee, and $500 delivery insurance coverage.

Q9. When setting up his fixed asset account for these new rental bikes, what is Gavin’s original cost?

Under an operating lease, the monthly payments are considered a(n) ____________________. 

  • Other Accrued Liability
  • Operating Expense
  • Deferred Revenue
  • Other Asset

Q10. True or False: For tax purposes, an operating lease is NOT considered a rental expense. 

  • F​alse
  • T​rue

Q11. The following are true about operating leases except:

  • They do not record interest expense
  • They reduce the value of the asset year over year
  • They record interest as an expense
  • They record the lease expense as an operating expense

Q12. A lease in which the transfer of ownership is not intended at the end of the lease life is called _________.

  • Operating Lease
  • Capital Lease
  • Equipment Lease
  • Transfer Lease

Q13. When considering the service life of an asset, the estimate is based on all of the following considerations: (Select all that apply)

  • How complex the item is (high tech vs low tech).
  • How long the item will last relative to other similar items.
  • How often the item will be used.
  • The total cost of the item relative to other similar items.

Q14. The party who owns the asset that is being rented or leased is known as ________.

  • Lessee
  • Lessor
  • Lease
  • Capital Lease

Q15. True or False: Some assets return value after their service life.

  • T​rue
  • F​alse

Q16. Which of the following are examples of PP&E? (Select all that apply)

  • Land
  • Cash
  • A company truck
  • Inventory

Q17. Sanjay has a food truck, “Pakora”, that specializes in his culture’s cuisine. He is leasing the truck through a capital lease. His original cost was $35,500 and the expected useful life of this vehicle is 8 years. 

What is Sanjay’s annual depreciation on his food truck?

Q18. Sanjay has a food truck, “Pakora”, that specializes in his culture’s cuisine. He is leasing the truck through a capital lease. His original cost was $35,500 and the expected useful life of this vehicle is 8 years. Calculate his annual depreciation. 

What would the book value be of Sanjay’s food truck after 1 year? 

Q19. For a capital lease, you must include the following journal entries except:

  • One entry to record the monthly payment
  • One entry to record the initial payment
  • One entry to record the interest alone 
  • One entry to record the lease 

Q20. True or False: Land is considered a noncurrent asset. 

  • True
  • F​alse

Assets in Accounting Week 04 Quiz Answers

Cash, accounts receivable, and cash receipts quiz

Q1. If you collect cash for a $500 sale, what accounts increase by $500?

  • Assets and equity
  • Equity and liabilities
  • Liabilities and expenses
  • Expenses and equity

Q2. Your company had a beginning cash balance of $10,000 in October. You sold $5,500 in services for cash and $4,000 to be invoiced. What is your company’s cash balance at the end of October?

  • $19,500 
  • $14.000 
  • $15,500

Q3. Your company had a beginning equity balance of $8,000 in November. You sold $6,000 in services for cash and $3,500 to be invoiced. What is your company’s equity balance at the end of October?  

  • $11,500 
  • $17,500
  • $14,000

Q4. How is the accounting equation useful for detecting entry or calculation errors? 

  • It never allows debits to be recorded as assets.
  • It always reveals missing journal entries.
  • It always reveals if a payment is applied to the wrong invoice.
  • An unbalanced equation can tip you off that an error exists somewhere.

PP&E Concepts Quiz

Q1. Big Boss Building Company purchased some construction equipment to keep up with demand. The new bookkeeper booked this as an expense. Is this correct?

  • Yes
  • No

Q2. Aubergine’s Antiques took out a capital lease for a moving van to transport heavier antiques. Will they be able to depreciate this equipment?

  • Yes
  • No

Q3. Adé just purchased $75 worth of new staplers for her Honey Helpers Bees business. She wants to book this as a noncurrent asset. Is that the correct way to book it?

  • Yes
  • No

Q4. Jason’s Medicinal Juniper Farm recently leased a stump drilling machine for 12 months on an operating lease. Will he be able to account for disposition of this equipment at the end of the lease?

  • Yes
  • No

Quiz : Assets in Accounting Case Study Quiz

Q1. Body and Swole made __________ in net income from May 1 – July 31.

  • $1,785.46
  • $2,979.46
  • $1,475.46
  • -$1,250.46

Q2. What was the total COGS for Body and Swole on the trial balance?

  • $100
  • $180
  • $50
  • $80

Q3. The total debits for the trial balance equals:

(format your response as $xx,xxx.xx)

Q4. On the inventory tracking tab, because of the inventory error, the incorrect net income for May – July is _____________. (format your response $x,xxx.xx)

Q5. On the inventory tracking tab, because of the inventory error, the incorrect net income for August – September is ________________. (format your response $x,xxx.xx)

Q6. Body and Swole check their inventory at the end of every month as part of their management system. This kind of management system is called:

  • Perpetual
  • Periodic
  • Proactive
  • Episodic

Q7. If a vendor has not paid a business for services or goods rendered, and the two parties come to an agreement regarding terms to recover the unpaid balance (including time frame and interest). That agreement is called a ___________________.

  • Promissory Note
  • Notes Receivable
  • Notes Payable
  • Contra-Account

Q8. What was Body and Swole’s total assets on the balance sheet at the end of July?

  • $38,785
  • $40,285
  • $41,785
  • $37,285

Q9. When entering a promissory note in the journal as a notes receivable, each entry for a payment received includes all of the following except:

  • The interest on the original, total principal owed.
  • The interest paid on principal owed (the remaining balance).
  • A debit to the cash account for the principal and interest paid.
  • A credit to the notes receivable account for the principal paid.

Q10. Body and Swole purchased $25,000 worth of equipment to open its doors. The expected life of their equipment is 5 years with an anticipated salvage value of $6,000. What would they report as their equipment’s annual depreciation at the end of the year? (Report your answer as $x,xxx)

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