accounting final

straight line depreciation

(cost - salvage value) / useful life

b

. Which of the following is NOT a characteristic of natural resources? a.Removed for sale b.Exist physically c.Naturally occurring d.Removed and sold over more than one year

b

1. Which is NOT a fixed asset? a.airplane b.trademark c.equipment d.land

Allowance for Doubtful Accounts

A contra asset account for accounts receivable in which is recorded the estimate for uncollectible accounts when using the allowance method.

warranty

A liability account that reports the estimated amount that a company will have to spend to repair or replace a product during its period.

Unearned Revenue

A liability created when a business collects cash from customers in advance of providing services or delivering goods.

double declining balance method

A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.

trademark

A name, term, or symbol used to identify a business and its products.

goodwill

An intangible asset that is created from such favorable factors as location, product quality, reputation, and managerial skill.

patents

Exclusive rights to produce and sell goods with one or more unique features.

FICA Components

FICA taxes are called payroll taxes because they are based on the amounts paid to employees. FICA taxes have two elements. withheld from employee paychecks and paid by employees and employers for (1) Social Security (OASDI) and (2) Medicare.

intangible assets

Long-term assets that are used in the operations of a business, are not held for sale, and are without physical qualities.

units of production depreciation

Method that charges a varying amount to depreciation expense for each period of an asset's useful life depending on its usage.

Net pay

The amount paid the employee, calculated as gross pay less payroll deductions.

Maturity

The amount that is due at the maturity or due date of a note, which is the sum of the face amount and any interest.

a

The entry to record the amortization of a patent would include a debit to __________ and a credit to __________. a.Amortization Expense; Patents b.Amortization Expense; Accumulated Amortization c.Patents; Accumulated Amortization d.Patents Expense; Accumulated Amortization

c

The exclusive right to publish and sell a literary, artistic, or musical composition is granted by a a.patent. b.trademark. c.copyright. d.franchise.

copyright

The exclusive right to publish and sell a literary, artistic, or musical composition.

bad debt

The operating expense incurred because of the failure to collect receivables.

amortization.

The periodic transfer of the cost of an intangible asset to expense or of a bond discount to interest expense.

Gross pay

The total earnings of an employee for a payroll period.

Note payable

a general ledger liability account in which a company records the face amounts of the promissory notes that it has issued.

Depreciation

a lessening in value

Natural resources

are classified as a type of fixed asset. The cost of a natural resource includes the cost of obtaining and preparing it for use. For example, legal fees incurred in purchasing a natural resource are included as part of its cost. As natural resources are harvested or mined and then sold, a portion of their cost is debited to an expense account called Depletion Expense.

plant assets

asset with a useful life of more than one year that is used in producing revenues in a business's operations.

Gross Margin

is a company's net sales revenue minus its cost of goods sold (COGS).

long-term liabilities

is an obligation resulting from a previous event that is not due within one year of the date of the balance sheet (or not due within the company's operating cycle if it is longer than one year).

Market Value

is the estimated worth of an asset, based on how much a buyer would be willing to pay the seller. Keep track of the value of your assets and depreciation with online accounting software.

Interest Payable

is the interest expense that has been incurred (has already occurred) but has not been paid as of the date of the balance sheet. [Interest payable does not include the interest for periods after the date of the balance sheet.]

Current Liabilities

liabilities due within a short time, usually within a year

Cost of Goods Sold

the amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies

Salvage value

the estimated value of a fixed asset at the end of its useful life

Interest Expense

the interest accrued on money borrowed

Book Value

the of assets at the end of its useful life.

Allowance methods used to calculate bad debt

the sales or income statement approach, which uses a percentage of a company's total sales for the period, or the balance sheet approach, which uses a percentage of accounts receivable for a period.

Accumulated Depreciation

the total amount of depreciation expense that has been recorded since the purchase of a plant asset