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Accounting ll
Ch. 21 vocab.
| Question | Answer |
|---|---|
| Cash and other assets expected to be exchanged for cash or consumed within a year. | Current assets |
| Assets that will be used for a number of years in the operation of a business. | Plant assets |
| Financial statements contain all information necessary to understand a business's financial condition. | Adequate disclosure |
| Businesses may have three major types of plant assets - equipment, buildings, and land. | FYI – 3 major plant assets |
| The actual amount paid for merchandise or other items bought is recorded. | Historical cost |
| Land and anything attached to the land. | Real property |
| All property not classified as real property. | Personal property |
| The value of an asset determined by tax authorities for the purpose of calculating taxes. | Assessed value |
| Assessed value is usually based on the judgment of persons referred to as assessors (elected by citizens or specially trained employees of a governmental unit). | FYI – assessed value extra |
| Revenue from a business activities and expenses associated with earning that revenue are recorded in the same accounting period. | Matching Expenses with Revenue |
| The portion of a plants asset's cost that is transferred to an expense account in each fiscal period during a plant asset's useful life. | Depreciation Expense |
| The original cost of a plant asset includes all costs paid to make the asset usable to a business. These costs include the price of the asset, delivery costs, and any necessary installation costs. | Original Cost |
| The amount an owner expects to receive when a plant asset is removed from use. | Estimated Salvage Value |
| Estimated salvage value may also be referred to as residual value or scrap value. | FYI – Residual Value or Scrap Value |
| The total amount of depreciation expense is distributed over the estimated useful life of a plant asset. | Estimated Useful Life |
| Is caused by wear from use and deterioration from aging and weathering. | Physical Depreciation |
| Occurs when a plant asset becomes inadequate or obsolete. | Functional Depreciation |
| No longer satisfactorily perform the needed service. | Inadequate |
| A newer asset can operate more efficiently or produce better service. | Obsolete |
| Charging an equal amount of depreciation expense for a plant asset in each year of useful life. | Straight-line Method of Depreciation |
| The total amount of depreciation expense that has been recorded since the purchase of a plant asset. | Accumulated Depreciation |
| The original cost of a plant asset minus accumulated depreciation. | Book Value of a Plant Asset |
| An accounting form on which a business records information about each plant asset. | Plant Asset Record |
| At any time, the book value of plant assets can be calculated by subtracting Accumulated Depreciation form the plant asset account. | FYI – Calculating book value any time |
| A plant asset may be sold at any time during the asset's useful life. When a plant asset is sold, its depreciation form the beginning of the current fiscal year to the date of disposal is recorded. | FYI – plant asset sold |
| Revenue that results when a plant asset is sold for more than the book value. | Gain on Plant Assets |
| A gain form the sale of plant assets is not an operating expense. Therefore, Gain on Plant Assets is listed in a classification titled Other Revenue in the chart of accounts. | Other Revenue |
| The loss that results when a plant asset is sold for less than book value. | Loss on Plant Assets |
| A loss from the sale of plant assets is not a operating expense. Therefore, Loss on Plant Assets is listed in a classification titled Other Expenses in the chart of accounts. | Other Expenses |
| Multiplying the book value by a constant depreciation rate at the end of each fiscal period. | Declining-Balance Method of Depreciation |
| Many businesses us a declining-balance rate that is two times the straight-line rate. This method of depreciation is referred to as the double declining-balance method. | FYI – Double Declining-Balance Method |
| A plant asset is never depreciated below its estimated salvage value. | FYI – Plant Asset is Never |
Created by:
mmincy
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