Ethiopian Exit Exam Questions and Answers Pdf

Ethiopian exit exam questions and answers pdf

1. Which of the following is an example of a plant asset?
   a. Accounts Receivable
   b. Inventory
   c. Machinery
   d. Accounts Payable
   Solution: c. Machinery
2. Which of the following is an example of land improvements?
   a. Building
   b. Parking lot
   c. Office furniture
   d. Inventory
   Solution: b. Parking lot
3. What is the cost of a piece of equipment that was purchased for $10,000 and had $500 of freight-in costs?
   a. $9,500
   b. $10,000
   c. $10,500
   d. $11,000
   Solution: c. $10,500
4. What is the estimated useful life of a building that is expected to last 30 years?
   a. 10 years
   b. 20 years
   c. 30 years
   d. 40 years
   Solution: c. 30 years
5. What is depreciation?
   a. An increase in the value of an asset
   b. A decrease in the value of an asset
   c. An increase in revenue
   d. A decrease in expenses
   Solution: b. A decrease in the value of an asset
6. Which of the following is an example of a current asset?
   a. Land
   b. Building
   c. Equipment
   d. Inventory
   Solution: d. Inventory
7. What is the difference between book value and market value?
   a. Book value is the amount paid for an asset and market value is the estimated worth of the asset
   b. Market value is the amount paid for an asset and book value is the estimated worth of the asset
   c. Book value is the estimated worth of an asset and market value is the market price of the asset
   d. Market value is the estimated worth of an asset and book value is the balance sheet value of the asset
   Solution: d. Market value is the estimated worth of an asset and book value is the balance sheet value of the asset
8. Which of the following is not a method of calculating depreciation?
   a. Straight-line
   b. Double-declining balance
   c. Sum-of-years-digits
   d. Cash-basis
   Solution: d. Cash-basis
9. Which of the following is a contra-asset account?
   a. Accumulated Depreciation
   b. Prepaid Rent
   c. Goodwill
   d. Accounts Payable
   Solution: a. Accumulated Depreciation
10. What is the formula for calculating straight-line depreciation?
    a. (Cost – Salvage Value) / Useful Life
    b. Cost * Useful Life
    c. Cost / (Useful Life – Salvage Value)
    d. Cost – Salvage Value
    Solution: a. (Cost – Salvage Value) / Useful Life
11. If a piece of equipment was purchased for $5,000, has a salvage value of $1,000 and an estimated useful life of 5 years, what is the annual depreciation expense using the straight-line method?
    a. $1,000
    b. $800
    c. $600
    d. $400
    Solution: b. $800
12. Which of the following is not a factor in determining the useful life of an asset?
    a. Age of the asset
    b. Estimated resale value of the asset
    c. Maintenance costs of the asset
    d. Usage of the asset
    Solution: b. Estimated resale value of the asset
13. Which of the following is not a component of the cost of a building?
    a. Purchase price
    b. Legal fees associated with the purchase
    c. Closing costs
    d. Annual property taxes
    Solution: d. Annual property taxes
14. What is the gain or loss on the disposal of an asset?
    a. It is the difference between the book value and the market value of the asset
    b. It is the difference between the cost and the book value of the asset
    c. It is the difference between the cost and the market value of the asset
    d. It is the amount paid for the asset
    Solution: b. It is the difference between the cost and the book value of the asset
15. Which of the following is an advantage of the straight-line method of depreciation?
    a. It is the easiest method to calculate
    b. It results in the highest annual depreciation expense
    c. It produces a more uniform expense over the life of the asset
    d. It produces the lowest annual depreciation expense
    Solution: c. It produces a more uniform expense over the life of the asset
16. Which of the following is a factor in determining the salvage value of an asset?
    a. The cost of the asset
    b. The estimated useful life of the asset
    c. The condition of the asset
    d. The estimated resale value of the asset
    Solution: d. The estimated resale value of the asset
17. Which of the following is an example of an intangible asset?
    a. Buildings
    b. Equipment
    c. Goodwill
    d. Land
    Solution: c. Goodwill
18. Which of the following is not an example of a repair expense?
    a. Replacing a lightbulb
    b. Replacing a window
    c. Replacing a roof
    d. Painting a room
    Solution: c. Replacing a roof (this would be considered a capital expenditure)
19. Using the double-declining balance method, what is the depreciation expense for an asset that cost $10,000 and has a useful life of 5 years?
    a. $4,000
    b. $3,200
    c. $1,600
    d. $1,280
    Solution: b. $3,200
20. Which of the following is an example of a natural resource?
    a. Machinery
    b. Land
    c. Patents
    d. Accounts Receivable
    Solution: b. Land
21. Which of the following is the correct order of steps in the disposal of an asset?
    a. Update the Accumulated Depreciation account, record the gain or loss on disposal, remove the asset from the books
    b. Record the gain or loss on disposal, remove the asset from the books, update the Accumulated Depreciation account
    c. Remove the asset from the books, update the Accumulated Depreciation account, record the gain or loss on disposal
    d. None of the above
    Solution: b. Record the gain or loss on disposal, remove the asset from the books, update the Accumulated Depreciation account
22. Which of the following is not a factor in determining the cost of a piece of equipment?
    a. Purchase price
    b. Freight-in costs
    c. Installation costs
    d. Annual maintenance costs
    Solution: d. Annual maintenance costs
23. Which of the following is an example of an intangible asset with a limited life?
    a. Patents
    b. Trademarks
    c. Copyrights
    d. Goodwill
    Solution: a. Patents
24. What is the carrying value of a building that was purchased for $1 million, has $200,000 of accumulated depreciation, and a market value of $900,000?
    a. $900,000
    b. $800,000
    c. $1 million
    d. $1.1 million
    Solution: b. $800,000
25. Which of the following is not a component of the cost of land?
    a. Purchase price
    b. Legal fees associated with the purchase
    c. Closing costs
    d. Annual property taxes
    Solution: d. Annual property taxes

1. Under the straight-line method, what is the annual depreciation expense for an asset that cost $50,000 and has a useful life of 10 years?
   a. $5,000
   b. $4,000
   c. $3,500
   d. $2,500
   Solution: a. $5,000
2. Which of the following is a disadvantage of the double-declining balance method?
   a. It is more difficult to calculate than other methods
   b. It does not take salvage value into account
   c. It results in a less uniform expense over the life of the asset
   d. It results in a lower annual depreciation expense than other methods
   Solution: c. It results in a less uniform expense over the life of the asset
3. Which of the following is an example of a long-term investment?
   a. Accounts Receivable
   b. Inventory
   c. Treasury Stock
   d. Land
   Solution: d. Land
4. Which of the following is an example of a natural resource with a finite life?
   a. Timber
   b. Oil
   c. Land
   d. Water
   Solution: b. Oil
5. Which of the following is a component of the cost of a patent?
   a. Legal fees associated with obtaining the patent
   b. Annual maintenance costs of the patent
   c. The estimated resale value of the patent
   d. All of the above are components of the cost of a patent
   Solution: a. Legal fees associated with obtaining the patent
6. Which of the following is not a component of property, plant, and equipment?
   a. Buildings
   b. Equipment
   c. Patents
   d. Land
   Solution: c. Patents
7. What is the formula for calculating double-declining balance depreciation?
   a. (Cost – Salvage Value) / Useful Life
   b. (2 x Straight-line rate) x Beginning book value
   c. Cost / Useful Life
   d. Cost – Accumulated Depreciation
   Solution: b. (2 x Straight-line rate) x Beginning book value
8. Which of the following is not a method of calculating depletion?
   a. Straight-line
   b. Double-declining balance
   c. Units of production
   d. Cost-benefit
   Solution: d. Cost-benefit
9. Which of the following is an example of a current liability?
   a. Mortgage Payable
   b. Accounts Payable
   c. Long-Term Notes Payable
   d. Bonds Payable
   Solution: b. Accounts Payable
10. What is a capital expenditure?
    a. An expense that is incurred to maintain an asset
    b. An expense that is incurred to upgrade an asset
    c. An expense that is incurred to repair an asset
    d. An expense that is incurred to dispose of an asset
    Solution: b. An expense that is incurred to upgrade an asset
11. Which of the following is not a factor in determining the fair value of an asset?
    a. Age of the asset
    b. Market conditions
    c. Overall economic conditions
    d. Estimated useful life of the asset
    Solution: d. Estimated useful life of the asset
12. Which of the following is not a component of the cost of an intangible asset?
    a. Legal fees associated with obtaining the asset
    b. Annual maintenance costs of the asset
    c. The estimated resale value of the asset
    d. All of the above are components of the cost of an intangible asset
    Solution: b. Annual maintenance costs of the asset
13. What is an impairment loss?
    a. A loss caused by damage to an asset
    b. A loss caused by the sale of an asset
    c. A loss caused by the disposal of an asset
    d. A loss caused by the decline in value of an asset
    Solution: d. A loss caused by the decline in value of an asset
14. Which of the following is not a factor in determining the cost of a building?
    a. Purchase price
    b. Legal fees associated with the purchase
    c. Closing costs
    d. Annual depreciation
    Solution: d. Annual depreciation
15. Which of the following is an example of a natural resource with an infinite life?
    a. Land
    b. Timber
    c. Oil
    d. Water
    Solution: a. Land
16. Which of the following is an example of a betterment?
    a. Replacing a lightbulb
    b. Replacing a window
    c. Adding a security system to a building
    d. Painting a room
    Solution: c. Adding a security system to a building
17. Which of the following is an advantage of the units of production method of depreciation?
    a. It results in a more uniform expense over the life of the asset
    b. It is the easiest method to calculate
    c. It produces the lowest annual depreciation expense
    d. It results in the highest annual depreciation expense
    Solution: a. It results in a more uniform expense over the life of the asset
18. Which of the following is not a factor in determining the fair value of a liability?
    a. Interest rates
    b. Creditworthiness of the debtor
    c. Term of the liability
    d. The company’s level of debt
    Solution: d. The company’s level of debt
19. Which of the following is not a component of accumulated depreciation?
    a. Depreciation expense
    b. Maintenance costs
    c. Book value
    d. Depreciation method used
    Solution: b. Maintenance costs
20. Which of the following is an example of a natural resource with an indefinite life?
    a. Timber
    b. Oil
    c. Land
    d. Water
    Solution: c. Land
21. Which of the following is not an example of a capital expenditure?
    a. Replacing a roof
    b. Remodeling a room
    c. Repairing a leaky faucet
    d. Adding insulation to a building
    Solution: c. Repairing a leaky faucet
22. Which of the following is a disadvantage of the units of the production method of depreciation?
    a. It results in a less uniform expense over the life of the asset
    b. It is difficult to calculate
    c. It produces the highest annual depreciation expense
    d. It does not take salvage value into account
    Solution: a. It results in a less uniform expense over the life of the asset
23. What is a partial year of depreciation?
    a. Only part of the annual depreciation expense is recorded in the first year of an asset’s life
    b. Depreciation is only recorded in the last year of an asset’s life
    c. The annual depreciation expense is prorated based on the number of days in the year the asset was used
    d. None of the above
    Solution: c. The annual depreciation expense is prorated based on the number of days in the year the asset was used
24. Which of the following is an example of a deferred expense?
    a. Prepaid Rent
    b. Accumulated Depreciation
    c. Treasury Stock
    d. Land
    Solution: a. Prepaid Rent
25. Which of the following is an example of a deferred revenue?
    a. Accounts Receivable
    b. Accumulated Depreciation
    c. Unearned Rent
    d. Buildings
    Solution: c. Unearned Rent

COC Exam Questions with Answer Part 1 2012 Free

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Ethiopian exit exam questions and answers pdf Ethiopian exit exam questions and answers pdf Ethiopian exit exam questions and answers pdf Ethiopian exit exam questions and answers pdf Ethiopian exit exam questions and answers pdf Ethiopian exit exam questions and answers pdf Ethiopian exit exam questions and answers pdf