CAP Accounting Paraprofessional Skills and Knowledge Covered 3

Question 1

Which depreciation method results in the highest depreciation expense in the early years of an asset's life?

Accepted Answer

Double declining balance method

Answer

The double declining balance method applies a fixed percentage to the declining book value, producing the largest depreciation in early years.

Question 2

An employee earns $3,000 per month. Their federal income tax withholding is $420 and FICA is $229.50. What is the employee's net pay?

Accepted Answer

$2,350.50

Answer

$3,000 − $420 − $229.50 = $2,350.50 net pay after withholdings.

Question 3

Which of the following would be recorded as a capital expenditure rather than a revenue expenditure?

Accepted Answer

Purchasing a new delivery truck

Answer

A new delivery truck is a capital expenditure because it provides economic benefits beyond one year and is capitalized as an asset.

Question 4

The matching principle in accounting requires that:

Accepted Answer

Revenues and expenses are recorded in the same period they occur

Answer

The matching principle states that expenses should be recognized in the same period as the revenues they helped generate.

Question 5

A company's gross profit margin is 40% and net sales are $500,000. What is the cost of goods sold?

Accepted Answer

$300,000

Answer

If gross profit margin is 40%, then COGS = 60% of sales; $500,000 × 0.60 = $300,000.

(CAP) Certified Accounting Paraprofessional Practice Test