Asset Management Asset Valuation and Accounting 3

Question 1

What does the term 'useful life' mean in asset accounting?

Accepted Answer

The period over which the asset is expected to provide economic benefit

Answer

The time until first major repair

Answer

The manufacturer's warranty period

Answer

The time until full depreciation

Question 2

Which financial ratio measures how efficiently a company uses its assets to generate revenue?

Accepted Answer

Asset turnover ratio

Answer

Current ratio

Answer

Debt-to-equity ratio

Answer

Quick ratio

Question 3

A capitalization threshold is used in asset accounting to:

Accepted Answer

Determine the minimum cost at which items are recorded as fixed assets

Answer

Limit total asset spending

Answer

Set the maximum depreciation rate

Answer

Cap the number of assets per department

Question 4

What is the effect of a fully depreciated asset that is still in service?

Accepted Answer

No further depreciation is recorded; it remains on books at salvage value

Answer

It must be written off immediately

Answer

Depreciation continues at half rate

Answer

The asset is reclassified as inventory

Question 5

Which internal control is most important for preventing ghost assets in an asset register?

Accepted Answer

Physical asset verification and reconciliation

Answer

Annual external audit

Answer

Manager approval of purchases

Answer

IT password controls

Question 6

For tax purposes, the US IRS Section 179 deduction allows businesses to:

Accepted Answer

Expense the full cost of qualifying assets in the year of purchase

Answer

Defer depreciation for 5 years

Answer

Amortize intangible assets over 15 years

Answer

Claim accelerated depreciation only on vehicles