Which of the following costs would be classified as capital expenditure for a restaurant business?8.6 Which of the following best explains what is meant by 'capital expenditure?Expenditure on non-current assets, including repairs and maintenanceExpenditure on expensive assetsExpenditure relating to the issue of share capitalExpenditure relating to the acquisition or improvement of non-current assetsBD8.7Which of the following costs would be classified as capital expenditure for a restaurant businessA replacement for a broken windowB Repainting the restaurantC An illuminated sign advertising the business nameDCleaning of the kitchen floorsWhich one of the following costs would be classified as revenue expenditure on the invoice for a hewcompany car?8.8ARoad taxBNumber platesCFitted stereoDDelivery costs

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 12MCQ: Which of the following statements is true? a. The fixed asset turnover ratio assists managers in...

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Do you AGREE or DISAGREE with the following statement? A firm which wants to MAXIMIZE Net Income subsequent to a business combination may want to allocate as much of the purchase price as possible to Intangible Assets that have an indefinite useful life. Please circle either AGREE or DISAGREE, and BRIEFLY support your answer
Which of the following is an example of a capital expenditure? Select all that apply A- New equipment B- Employee salaries C- Computer software D- Repair and renovation costs
1. All projects with positive NPVs should be accepted and those with negative NPVs should be rejected. Comment2. Economic value of a company's assets corresponds to present value of asset cash flows and present value of terminal value. Comment3. When valuing companies it is necessary at valuation date to take as disbursement investment in Net Operating Working Capital (known as NOWC). Latter is estimated as product between annual sales of current period and CTON ratio (known as NOWCR). Comment.
The entity has several high-cost.non-profitgenerating assets. It also has:avcost of debt and equity significantly higher than the industry average. In creating and executing a financial policy, the financial manager may do the following EXCEPT: a. Suggest a cost-benefit analysis using capital budgeting techniques on the non-profit-generating assets.b. Request for a more conservative investing and financing policy.c. Determine the cause of the high cost of financing.d. Determine whether these non-profit-generating assets be sold and be used to purchase other non-operating assets that can provide a return higher than the cost to finance these.
Which ot the following statements is true? a. IFRS requires firms to expense immediately all internal expenditures for R&D costs. b. Under IFRS, the product development portion of R&D is capitalized. c. U.S. standard setters require R&D costs to be expensed because of the uncertainty in judging their future revenue-generating potential. d. GAAP required disclosure of firms’ R&D expenditures assits the investor well. This is particularly true for firms with large R&D expenditures, such as technology firms. Which of the following statements is true? (Select one or more) a. For some transactions U.S. GAAP requires that value changes are recognized on the balance sheet and the income statement when they occur, even if not realized. b. U.S. GAAP allows firms to revalue upward the values of assets whose fair values have increased. c. A write down is necessary if the fair market value (FMV) of equipment is less than the carrying value currently on the books…
Identify the following costs that could be capitalized on the firm’s balance sheet (included in property, plant, and equipment). New windshield wiper blades on the company’s truck New sidewalks in front of the firm’s factory Freight expenses for new equipment installed in the factory Installation costs for the new equipment Realtor’s fees associated with land purchase Minor engine repair on the truck Engine replacement on the truck Razing or demolishing a building on newly acquired land Design costs for a new building Value-added tax Construction expenses associated with building a garage Costs required to bring the equipment to its intended location Administration and other general overhead costs Idle capacity Wasted materials, labour and other resources
Which of the following statements is/are FALSE: I. Following the acquisition of an item of property, plant and equipment, subsequent expenditure for this item that will extend the asset’s useful life and increase the asset’s capacity is capitalised. II. Investment property does not get depreciated, unless it is measured at cost. III. In the statement of comprehensive income, costs can be analysed according to function or nature. Costs analysed according to function are classified into the following categories: distribution & selling costs; administrative expenses; other operating expenses (or income). IV. Because of the prudence convention, inventories are expensed in the income statement as cost of goods sold when they are sold, and not when they are bought in by the business and paid for. V. A complete set of financial statements consists of the statement of financial position, the statement of comprehensive income, the statement of changes in equity and the statement of…
Which of the following is considered capital expenditure Select one: a. Research expenses. b. Purchase of office consumables. c. Cost of material to construct new plant. d. Staff overtime.
Which of the following statements is incorrect?(a) Economic decisions arc time invariant.(b) Time and risk arc the most important factors in any in vestment evaluation.(c) For a large-seal!! engineering project. engineers must consider the impact of the project on the company·s financial statemen ts.( d) One of the primary roles of engineers is to make capital expenditure decisions.
Your manager is on the company’s capital investment decision team that is to decide on alternatives for the acquisition of a new accounting system for the company. The manager says, “the book value of the existing accounting system for the company that we are considering replacing is nothing but an accounting amount and as such is irrelevant in the capital expenditure analysis.” Does this reasoning make sense? Why or why not?
Put yes or no in front of each of the following statements: 1- () An inventory is the inventory of assets and liabilities in terms of quantity and peak 2- () The reducing premium represents a percentage of the net value of the fixed asset 3- () The imposition of the independence of the accounting unit states that the project has an independent legal personality over the personality of the owner 4- () One of the objectives of the inventory is to determine the real value of the liabilities and assets in the project 5- () Expenses paid in advance from other credit balances that appear on the right side of the balance sheet 6- () The principle of prudence and caution stipulates that one must be careful not to record potential expenses, other than potential revenues
13. Which of the following statements is true? a.The tangible capital asset turnover ratio assists managers in determining the estimated future capital expenditures that are needed. b.The average age of the tangible capital assets is computed by dividing accumulated depreciation by depreciation expense. c.If net sales increases, the tangible capital asset turnover ratio will decrease. d.A relatively low tangible capital asset turnover ratio signals that a company is efficiently using its assets.

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