Acct exam 3

double declining balance method

(1/useful life, in years) x 2

Average Inventory

(Beginning Inventory + Ending Inventory) / 2

Average total assets

(Beginning Total Assets + Ending Total Assets) / 2

units of production depreciation

(Cost-residual value)/useful life, in units of production

straight line depreciation

(cost-residual value)/useful life, in years

Waterside software began January w 3500 of merchandise inventory. During January, waterside made the following entered for its inventory transactions. How much was watersides inventory at the end of January?

4600 (beg inventory+inventory-cogs)

Dealers total cost of goods available for sale would be

9275 (beg inventory+purchases)

A capital ex

Adds to an asset

An understatement of ending inventory y 2 million in one period results in

An overstatement of gross profit by 2 million in the next period

How is cost of goods sold classified in the financial statements?

As an expense

Capitalizing a cost involves increasing what type of account?

Asset

new annual depreciation expense

Assets remaining book value/new estimated useful life

An error understated power corporation's dec 21.2018, ending inventory by 54000. What effect will this error have on total assets and net income for 2018?

Assets:understate Net income: understate

Whitmore corporation purchased a new delivery van on the last day of its fiscal year. The costs of the delivery van will appear on whitmores _ in the year of purchase

Balance sheet

Inventory turnover

COGS / avg inventory

Book vlaue

Cost of asset- accumulated depreciation

Assets remaining book value

Cost-accumulated depreciation-residual value

What statement about depreciation is false?

Depreciation should not be recorded in years in which the market value of the asset has increased

What depreciation method offers the highest tax advantage for the first year

Double declining balance

The depreciation method that does not initially use the residual value in depreciation calculations is the

Double-declining balance method

Ravenna candles recently purchased candleholders for resale in its shops. Which of the following costs would be part of the cost of the candleholder inventory?

Freight In

Two financial ratios that clearly distinguish a discount chain such a Walmart from a higher-end retailer such as Gucci are the gross profit percentage and the rate of inventory turnover. Which set of relationships is most likely for Gucci?

Gross profit percentage:high inventory turnover:low

When a company expenses the cost of maintenance for its heating and cooling system, that cost will appear on its

Income statement

Which of the following costs are reported on a company's income statement and balance sheet?

Income statement: COGS Balance sheet: Accumulated depreciation

The purchase of new equipment with cash would appear on the statement of cash flows as an

Investing cash flow

Which US GAAP principle or rule would apply if the net realizable value of a company's inventory is below its original cost?

Lower-of-cost-or-market rule

Return on Assets (ROA)

Net Income/average Total Assets

Kline Company failed to record depreciation of equipment. How does this omission affect Kline's financial statements?

Net income is overstated and assets are overstated

In a period of rising prices

Net income under LIFO will be higher than under FIFO

The word market as used in "the lower of cost market" generally means

Net realizable value

Gross Profit

Net sales revenue- cogs

An error understated golden flash company's dec 31,2018, ending inventory by 27,000. What effect will this error have on net income for 2019?

Overstate it

Which inventory system maintains a running record of inventory on hand, purchased, and sold?

Perpetual

Goodwill

Price- (assets-liabilities)

Building purchasing costs include

Purchase price Brokerage commission Sales and other taxes Expenditures to repair and renovate building for its intended purpose

Land costs include

Purchase price Brokerage commission Survey fees Legal fees Back property taxes Expenditures for grading and clearing land Removing unwanted buildings

Cost of Equipment

Purchase price Transportation from the seller Insurance while in transit Sales and other taxes Purchase commission Installation costs Expenditures Cost of special platforms

Which of the following is a measure of profitability?

Return on assets (ROA)

Which of the following items should be accounted for as a capital expenditure?

Taxes paid in conjunction with the purchase of office equipment

Which of the following should be recorded as a capital expenditure

Taxes, salaries of employees to construct the equipment, insurance in transit

Total asset turnover has increased at the oneil company since last year. This increase must mean that

The company has become more efficient

Which of the following situations indicates that an asset is impaired?

The net book value of the asset is more than the assets estimated future cash flows

When does the cost of inventory become an expense?

When inventory is delivered to a customer

COGS

beginning inventory+purchases-ending inventory

Which of the following is an intangible asset?

copyright

Gross Profit Percentage

gross profit/net sales revenue