Accounting Ii Midterm Review 2009

Front 1

A form prepared by the customer showing the price deduction taken by the customer for returns and allowances

Back 1

Debit Memorandum

Front 2

A ledger that is summarized in a single general ledger account

Back 2

Subsidiary ledger

Front 3

The amount remaining after the value of all liabilities is subtracted from the value of all assets

Back 3

Owner's equity

Front 4

A cash discount on purchases taken by a customer

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Purchases Discount

Front 5

An account in a general ledger that summarizes all accounts in a subsidiary ledger

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controlling account

Front 6

An amount of cash kept on hand and used for making small payments

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petty cash

Front 7

A business that purchases and sells goods

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Merchandising Business

Front 8

Anything of value that is owned

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Asset

Front 9

An amount owed by a business

Back 9

Liability

Front 10

A group of accounts

Back 10

Ledger

Front 11

The recording of debit and credit parts of a transaction

Back 11

Double-entry acounting

Front 12

A form for recording transactions in chronological order

Back 12

Journal

Front 13

An account that reduces a related account on a financial statement

Back 13

Contra Account

Front 14

A journal used to record only one kind of transaction

Back 14

Special Journal

Front 15

A business paper from which information is obtained for a journal entry

Back 15

Source document

Front 16

Financial rights to the assets of a business

Back 16

Equities

Front 17

An account balance that is opposite the normal balance

Back 17

Contra Balance

Front 18

Transferring informaton from a journal entry to ledger account

Back 18

Posting

Front 19

A deduction that a vendor allows on an invoice amount to encourage prompt payment

Back 19

Cash Discount

Front 20

An accounting system showing accounting information for two or more departments

Back 20

Departmental accounting system

Front 21

The recording of debit and credit parts of a transaction

Back 21

Double-entry acounting

Front 22

A form for recording transactions in chronological order

Back 22

Journal

Front 23

An account that reduces a related account on a financial statement

Back 23

Contra Account

Front 24

A journal used to record only one kind of transaction

Back 24

Special Journal

Front 25

A business paper from which information is obtained for a journal entry

Back 25

Source document

Front 26

Financial rights to the assets of a business

Back 26

Equities

Front 27

An account balance that is opposite the normal balance

Back 27

Contra Balance

Front 28

Transferring informaton from a journal entry to ledger account

Back 28

Posting

Front 29

A deduction that a vendor allows on an invoice amount to encourage prompt payment

Back 29

Cash Discount

Front 30

An accounting system showing accounting information for two or more departments

Back 30

Departmental accounting system

Front 31

A report of deposits, withdrawals, and bank balance sent to a depositor by a bank

Back 31

Bank statement

Front 32

An equation showing the relationship among assets, liabilities, and owner's equity

Back 32

Account equation

Front 33

The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current

Back 33

File Maintenance

Front 34

A ledger that contains all accounts needed to prepare financial statements

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General Ledger

Front 35

A record summarizing all the information pertaining to a single item in the accounting equation

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Account

Front 36

T or F: Records of departmental operating expenses are necessary to determine departmental fross profit from operations

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FALSE

Front 37

T or F: In a departmental business, each sales invoice shows the amount of merchandise sold by department

Back 37

TRUE

Front 38

T or F: Preparing two copies of a sales invoice provides a copy for the customer and a copy for the business to use for journalizing the transaction

Back 38

TRUE

Front 39

T or F: Each departmental sales journal entry is posted individually as a credit to the appropriate customer's account

Back 39

FALSE

Front 40

T or F: The vendor prepares a debit memorandum for a sales returns and allowanes transaction

Back 40

FALSE`

Front 41

T or F: An account showing deductions from a sales account is known as a contra cost account.

Back 41

FALSE

Front 42

T or F: A departmental cash receipts journal contains a Cash Debit column for each department

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FALSE

Front 43

T or F: A cash discount on sales is called a sales discount

Back 43

TRUE

Front 44

T or F: Both the debit part and the credit part of a cash and credit card sales transaction are entered in special amount columns in a departmental cash receipts journal

Back 44

TRUEE

Front 45

T or F: Each amount in the Accounts Receivable Credit column of a departmental cash receipts journal is posted individually to the accounts receivable ledger

Back 45

TRUE

Front 46

T or F: Each amount in the Sales Credit columns of a departmental cash receipts journal is posted individually to the debit side of the cash account

Back 46

FALSE

Front 47

T or F: The total of the Sales Credit column of a departmental cash receipts journal is posted to a general ledger account

Back 47

TRUE

Front 48

T or F: After the totals of special amount columns have been posted, the general ledger account numbers are writted in parenthesis below the special columns in the cash receipts journal

Back 48

TRUE

Front 49

T or F: Each amount in the Cash Debit column of a departmental cash receipts journal is posted individually to the debit side of the cash account

Back 49

FALSE

Front 50

The source document for recording a transaction in a departmental sales journal is

Back 50

a sales invoice

Front 51

One item of information available through a departmental accounting system is the

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gross profit for each department

Front 52

Recording all sales at the time of scale, regardless of when payment is made, is an application of the

Back 52

Realization of Revenue concept

Front 53

When golf equipment subject to sales tax is sold on account, Accounts Receivable is

Back 53

debited for the amount of merchandise

Front 54

In a departmental business, when golf equipment is sold on account

Back 54

Sales-Golf is credited

Front 55

Each amount in the Accounts Receivable Debit column of a departmental sales journal is

Back 55

posted as a debit to a customer's account

Front 56

The total of each column in a departmental sales journal is

Back 56

posted at the end of the month

Front 57

The account credited when a customer returns merchandise or is granted an allowance is

Back 57

none of these

Front 58

The source document for a sales returns and allowances transaction is

Back 58

a credit memorandum

Front 59

Each amount written in the Accounts Receivable Credit column of a sales returns and allowances journal is

Back 59

posted monthly

Front 60

A departmental cash receipts journal has an amount column for each department for the general ledger account

Back 60

Sales

Front 61

When a sales return has been granted, the amount of the return must be deducted from the amount of the original sale

Back 61

before the discount is calculated

Front 62

T or F: One payroll system is used by all employees in the United States

Back 62

FALSE

Front 63

T or F: Employers are required by lay to withold certain payroll information a business must keep and report

Back 63

TRUE

Front 64

T or F: Federal, state, and local governments specify the payroll information a business must keep and report.

Back 64

TRUE

Front 65

T or F: Employee benefits are provided by most businesses after one year of employment

Back 65

FALSE

Front 66

T or F: Detailed information about an employee's benefits is summarized in a benifits record.

Back 66

TRUE

Front 67

T or F: A benifits authorization form is used to record and authorize employee benefits

Back 67

TRUE

Front 68

T or F: Benifit hours used are recorded on each employee's time card

Back 68

TRUE

Front 69

T or F: In a time clock system, a payroll time card is inserted in the time clock each time an employee arrives for work and leaves work

Back 69

TRUE

Front 70

T or F: Information needed to complete an employee earnings record is obtained from a time card

Back 70

FALSE

Front 71

T or F: Income and social security are the two federal taxes deducted from earnings of each employee

Back 71

TRUE

Front 72

T or F: A payroll register summaries the payroll for one pay period

Back 72

TRUE

Front 73

T or F: An employee's total earnings, marital status, and number of withholding allowances claimed determine the federal income tax amount to be withheld.

Back 73

TRUE

Front 74

T or F: Congress sets the tax base and the tax rates for the social security tax

Back 74

TRUE

Front 75

T or F: In proving a payroll register's accuracy, the total of the Net Pay column is subtracted from the Total Deductions column

Back 75

FALSE

Front 76

T or F: An employee's total earnings and deductions for each quarter are summarized on one line of the employee earnings record

Back 76

FALSE

Front 77

T or F: After a biweekly payroll register has been completed, a check for the total earnings indicated on the payroll register is written for each employee.

Back 77

FALSE

Front 78

T or F: Unemployment taxes are used to pay qualified workers cash benifits for limited periods of unemployment

Back 78

TRUE

Front 79

T or F: Transferring payroll amounts electronically from the employer's account to the employee's bank account is known as electric funds transfer

Back 79

TRUE

Front 80

T or F: Both employers and employees are required to pay a federal unemployment tax

Back 80

FALSE

Front 81

T or F: The source document for journalizing employer payroll taxes is a memorandum

Back 81

TRUE

Front 82

Taxes based on the payroll of a business

Back 82

Payroll Taxes

Front 83

The money paid for employee services

Back 83

Salary

Front 84

A business form used to record payroll information

Back 84

Payroll Register

Front 85

Depositing payroll checks directly to an employee's checking or savings account in a specified bank

Back 85

Automatic Check Deposit

Front 86

The period covererd by a salary payment

Back 86

Pay period

Front 87

Payments to employees for nonworking hours and to insurance and retirement programs

Back 87

Employee benefits

Front 88

The total amount earned by all employees for a pay period

Back 88

Payroll

Front 89

A business form used to record details affecting payments made to an employee

Back 89

Employee Earnings Record

Front 90

A deduction from total earnings for each person legally supported by a taxpayer

Back 90

Withholding allowance

Front 91

Employee time away from business for personal reasons quialifies as

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personal leave

Front 92

When employees are paid a percentage of sales in addition to their regular salary, the earnings are often refered to as

Back 92

commissions

Front 93

Social Security and Medicare taxes are paid by

Back 93

both a and b (the employees and employer)

Front 94

A tax which is not deducted from employees' pay is

Back 94

federal unemployment tax

Front 95

In a biweekly payroll system employees are paid

Back 95

every two weeks

Front 96

The amount due an individual for a pay period after deductions is referred to as

Back 96

none of these

Front 97

When all employees have cashed their payroll checks, the balance of the payroll

Back 97

equals zero

Front 98

The frequency of employer payments of payroll taxes is determined by

Back 98

the amount owed

Front 99

Assets which will be used for a number of years in the operation of a business

Back 99

Plant assets

Front 100

A listing of vendor accounts, account balances, and total amount due all vendors

Back 100

Schedule of accounts payable

Front 101

Journal entries used to prepare temporary accounts for a new fiscal period

Back 101

Closing Entries

Front 102

The series of accounting activities included in recording financial information for a fiscal period

Back 102

Accounting cycles

Front 103

A listing of customert accounts, account balances, and total amount due from all customers

Back 103

schedule of accounts receivable

Front 104

Estimating inventory by using the previous year's percentage of gross profit on operations

Back 104

gross profit method of estimating an inventory

Front 105

A statement prepared at the end of a fiscal period of gross profit showing the gross profit for each department

Back 105

departmental statement of gross profit

Front 106

Merchandise inventory determined by counting, weighing, or measuring items of merchandise on hand

Back 106

Periodic inventory

Front 107

The percentage of relationship between one financial statement item and the total that includes that item

Back 107

component percentage

Front 108

A statement showing gross profit for each department for a portion of a fiscal period

Back 108

Interim departmental statement of gross profit

Front 109

A financial statement showing the revenue and expenses for a fiscal period

Back 109

Income statement

Front 110

An amount earned by a corporation and net yet distributed to stockholders

Back 110

retained earnings

Front 111

Journal entries recorded to update general ledger accounts at the end of fiscal period

Back 111

adjusting entries

Front 112

A financial statement that shows changes in a corporation's ownership for a fiscal period

Back 112

statement of stockholders' equity

Front 113

Merchandise inventory determined by keeping a continuous record of increases, decreases, and balance on hand

Back 113

Perpetual inventory

Front 114

A financial statement that reports assets, liabilities, and owner's equity on a specific date

Back 114

Balance Sheet

Front 115

The portion of a plant asset's cost that is transferred to an expense account in each fiscal period during a plant asset's useful life

Back 115

depreciation expense

Front 116

A trial balance prepared after closing entries are posted

Back 116

Post-closing trial balance

Front 117

Earnings distributed to stockholders

Back 117

dividends

Front 118

The length of time for which a business summarizes and reports financial information

Back 118

fiscal period

Front 119

The total shares of ownership in a corporation

Back 119

capital stock

Front 120

T or F: A common length of time for summarizing and reporting accounting information is one year

Back 120

TRUE

Front 121

T or F: A departmental statement of gross profit provides a manager with information about revenue and costs for each department

Back 121

TRUE

Front 122

T or F: Component percentages in a departmentailized business are used to analyze the financial results for each department

Back 122

TRUE

Front 123

T or F: Allowance for Uncollectible Accounts is debited in the adjustment for uncollectible accounts expense

Back 123

FALSE

Front 124

T or F: Income Summary-General is used for adjusting the merchandise inventory account balances for a departmentalized business

Back 124

FALSE

Front 125

T or F: The annual departmental statement of gross profit uses an actual ending inventory determind by a periodic inventory

Back 125

TRUE

Front 126

T or F: The Income Summary-General account balance is equal to the net income (or net loss) for a fiscal period

Back 126

TRUE

Front 127

T or F: Completing end-of-fiscal-period work is an application of the Accounting Period Cycle concept

Back 127

TRUE

Front 128

T or F: A departmentalized business does not prepare a post-closing trial balance

Back 128

FALSE

Front 129

A check with space for writing details about a cash payment

Back 129

Voucher check

Front 130

A journal used to record vouchers

Back 130

Voucher register

Front 131

A journal used in a voucher system to record cash payments

Back 131

check register

Front 132

A set of procedures for controlling cash payments by preparing and approving vouchers before payments are made

Back 132

Voucher system

Front 133

A business form used to show an authorized person's approval for a cash payment

Back 133

voucher

Front 134

The source document for an entry in a voucher register is a(an)

Back 134

voucher

Front 135

The source document for an entry in a check register is a(n)

Back 135

memorandum

Front 136

The liability account that is used in a voucher system in place of accounts payable is

Back 136

vouchers payable

Front 137

Vouchers to be paid are filled in the unpaid vouchers file according to the

Back 137

date the voucher must be paid

Front 138

When an account has no special columns in the voucher register, information is recorded in the

Back 138

general columns

Front 139

A check register is similar to and replaces a

Back 139

cash payments journal

Front 140

Paid vouchers are filed by the

Back 140

Name of the vendor

Front 141

T or F: Invoices are verified before a voucher is prepared

Back 141

TRUE

Front 142

T or F: Cash control procedures include storing cash in a safe place

Back 142

TRUE

Front 143

T or F: Vouchers are prepared only for bills other than invoices

Back 143

FALSE

Front 144

T or F: The source document for an entry in the voucher register is the approved invioce.

Back 144

FALSE

Front 145

T or F: In a voucher system, the account Vouchers Payable is used only for purchases of merchandise on account

Back 145

FALSE

Front 146

T or F: Prenumbered vouchers are a control procedure in a voucher system

Back 146

TRUE

Front 147

T or F: Vouchers must be approved before being recorded in the voucher register

Back 147

TRUE

Front 148

T or F: When a voucher is recorded, a notaiton is made on the voucher

Back 148

TRUE

Front 149

T or F: Vouchers are placed in the unpaid file according to the due date.

Back 149

TRUE

Front 150

T or F: When an amount is recorded in a special column in the vouchers register, an account title must be written in the Account Title column

Back 150

FALSE

Front 151

T or F: Separate amounts recorded in special amount columns of a voucher register are posted individually during the month.

Back 151

TRUE

Front 152

T or F: Separate amounts recorded in special amount columns of a voucher register are posted individually during the month

Back 152

FALSE

Front 153

T or F: Paid vouchers are filed according to the date paid

Back 153

FLASE

Front 154

T or F: In addition to journalizing cash payments, a check register can also be used to maintain the checking account balance.

Back 154

TRUE

Front 155

T or F: Each check recorded in a check register includes a debit to Vouchers Payable and a credit to Cash

Back 155

TRUE

Front 156

T or F: When a debit memo is issued for the return of merchandise purchased, the original voucher is discarded

Back 156

FALSE

Front 157

T or F: The amount of net salaries is credited to Vouchers Payable to record the voucher for payroll

Back 157

TRUE

Front 158

A form used during a periodic inventory to record information about each item of merchandise on hand

Back 158

Incentory record

Front 159

The person or business who gives goods on consignment

Back 159

cosignor

Front 160

The period of time needed to sell an average amount of merchandise inventory

Back 160

average number of days' sales in merchandise inventory

Front 161

A form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand

Back 161

Stock Record

Front 162

A file of stock records for all merchandise on hand

Back 162

stock ledger

Front 163

Using the price of merchandise purchased first to calculate the cost of merchandise sold first

Back 163

first-in, first-out inventory costing method

Front 164

Using the price of merchandise purchased last to calculate the cost of the merchandise sold first

Back 164

last-in, first-out inventory costing method

Front 165

Using the average cost of beginning inventory plus merchandise purchased during a fiscal period to calculate the cost of merchandise sold

Back 165

Weighted-average inventory costing method

Front 166

Using the lower of cost or market price to calculate the cost of ending merchandise inventory

Back 166

lower of cost or market inventory costing method

Front 167

Estimating inventory by using a percentage based on both cost and retail prices

Back 167

retail method of estimating inventory

Front 168

The number of times the average amount of merchandise inventory is sold during a specified period of time

Back 168

merchandise inventory turnover ratio

Front 169

Goods which are given to a business to sell, but for which title to the goods remains with the vendor

Back 169

Consignment

Front 170

A completed form authorizing a seller to deliver goods with paument to be made later

Back 170

purchase order

Front 171

the person or business who receives goods on consignment

Back 171

consignee

Front 172

T or F: The cost of merchandise avialable for sale consists of the cost of the beginning inventory and the purchases added to inventory fduring the fiscal period

Back 172

TRUE

Front 173

T or F: If the cost of the ending merchandise inventory is overstated, the net income will be understated

Back 173

FALSE

Front 174

T or F: If the cost of ending merchandise inventory is understateed, the cost of merchadise sold will be overstated.

Back 174

TRUE

Front 175

T or F: If the cost of ending merchandise inventory is understated, the total stockholders' equity will be overstated

Back 175

FALSE

Front 176

T or F: Calculating an accurate merchandise cost in order to adequately report a business' financial progress and condition is an application of the accounting concept Adequate Disclosure

Back 176

TRUE

Front 177

T or F: At the end of each fiscal period, the cost of merchandise available for sale is divided into the ending inventory and net purchases

Back 177

FALSE

Front 178

T or F: Typically, a business counts as part of its inventory all goods for sale legally owned by the business

Back 178

TRUE

Front 179

T or F: When the terms of sale for goods in transit are FOBA shipping point, the title to the goods passes to the buyer when the goods are received by the buyer.

Back 179

FALSE

Front 180

T or F: When the terms of sale for goods in transit are FOB destination, the title to the goods passes to the buyer when the goos are reeived by the buyer.

Back 180

TRUE

Front 181

T or F: When goods are sent to a business on consignment, title to the goods passes to the businesss accepting the consignment when the consignor delivers the goods to a transportation business

Back 181

FALSE

Front 182

T or F: A perpetual inventory provides day-to-day records about the quantity of merchandise on hand

Back 182

TRUE

Front 183

T or F: Because of the expense, many business take a periodic inventory only once a year

Back 183

TRUE

Front 184

T or F: Businesses using a perpetual inventory method never need to take a periodic inventory

Back 184

FALSE

Front 185

T or F: The weighted-avergage inventory costing method is based on assumption that each iteam in the ending inventory has a cost equal to the average price paid for similar items

Back 185

TRUE

Front 186

T or F: In the lower cost of market inventory vosting method, if the unit price is higher than the current market price, the inventory cost is reduced to the market price

Back 186

TRUE

Front 187

T or F: During a period of increasing prices, the weighted-average incentory costing method usually will give the lowest total inventory cost.

Back 187

FALSE

Front 188

T or F: During a period of decreasing prices, the fifo inventory costing method usually will give the lowest total inventory cost.

Back 188

TRUE

Front 189

T or F: Taking a periodic inventory once a month for interim monthly financial statements is usually too expensive to be worthwile

Back 189

TRUE

Front 190

T or F: Businesses that need an ending inventory cost for monthly interim financial statements will need to estimate monthlyu ending inventory

Back 190

FALSE

Front 191

T or F: Using the retail method of estimating inventory is more expensive than the gross progit method because more records must be kept.

Back 191

FALSE

Front 192

T or F: Using the retail method of estimating inventory is more expensive than the gross profit method because more records must be kept.

Back 192

TRUE

Front 193

T or F: A merchandise inventory turnover ratio expresses a relationship between an average inventory and the cost of merchandise sold.

Back 193

TRUE

Front 194

Accounts receivable that cannot be collected

Back 194

uncollectible accounts

Front 195

canceling the balance of a customer account because the customer does not pay

Back 195

writing off an account

Front 196

Recording uncolletible accounts expense only when an amount is actualy known to be uncollectible

Back 196

direct write-off method of recording losses from uncollectible accounts

Front 197

Crediting the estimated value of uncollectible accounts to a contra account

Back 197

allowance method of recording losses from uncollectible accounts

Front 198

Analyzing accounts receivable according to when they are due

Back 198

aging accounts receivable

Front 199

The difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible Accounts

Back 199

book value of accounts receivable

Front 200

The number of times the average amount of accounts receivable is collected during a specified period

Back 200

accounts receivable turnover ratio

Front 201

T or F: Uncollectible Accounts are sometimes referred to as bad debts

Back 201

TRUE

Front 202

T or F: When a sale on account is made, the amount is recorded in allowance for uncollectible accounts

Back 202

FALSE

Front 203

T or F: Until a specified amount is actually known to be uncollectible, the amount remains recorded in accounts receivable

Back 203

TRUE

Front 204

T or F: When a customer account is known to be uncollecitble, the account is no longer an asset

Back 204

TRUE

Front 205

T or F: When a customer account is known to be uncollectible, the amount becomes a business expense

Back 205

TRUE

Front 206

T or F: Because an uncollectible account may be collected in the future, the account should remain as part of the acounts receivable of a business

Back 206

FALSE

Front 207

T or F: Amounts owed by customers are recorded in a general ledger account titled accounts receivable.

Back 207

TRUE

Front 208

T or F: When using the allowance method, an uncollectible accounts should probably use the allowance method of recording uncollectible accounts expense

Back 208

TRUE

Front 209

T or F: A business with very few uncollectible accounts should probably use the allowance method of recording uncollectible accounts expense

Back 209

FALSE

Front 210

T or F: One disadvantage of the direct write-off method of recording uncollectible accounts expense is that the expese may not be recorded in the same fiscal period as the revenue for the sale

Back 210

TRUE

Front 211

T or F: Recording uncollectible accounts expense in the same fiscal period in which the orginal sale on account was made is an application of the Matching Expenses with Revenue acounting concept

Back 211

TRUE

Front 212

T or F: Because there is no way of knowing for sure which customer accounts will become uncollectible, an estimate is made based on past history of uncollectible accounts expense

Back 212

TRUE

Front 213

T or F: The formula for calculating the amount of uncollectible accounts expense base on a percentage of net sales is: Net sales times percentage equals estimated uncollectible accounts expense

Back 213

TRUE

Front 214

T or F: An adjusting entry is made at the end of a fiscal period to record the estimated uncollectible acounts expense

Back 214

TRUE

Front 215

T or F: Two accounts used for the uncollectible accounts expense adjustment are uncollectible accounts expense and accounts receivable

Back 215

FALSE

Front 216

T or F: Some businesses base their estimate of uncollectible accounts expense on a percentage of the total sales on account made during a fiscal period

Back 216

TRUE

Front 217

T or F: The Formula for calculating the amount of estimated uncollectible accounts expense when using a percentahe of total sales on account is: Total sales on account times percentage equals estimated uncollectible accounts expense.

Back 217

TRUE

Front 218

T or F: When using the allowance method of recording estimated uncollectible accounts expense, regardless of the method used to calculate the amount, the adjusting entry affects the same two accounts

Back 218

TRUE

Front 219

T or F: Businesses that sell on n/30 terms make special effort to collect accounts receivable that are more than 60 days old.

Back 219

TRUE

Front 220

T or F: Regardless of the care taken in granting credit, some customers will not pay the amounts owed

Back 220

TRUE

Front 221

T or F: Plant assets are any asset that will be consumed within a year

Back 221

FALSE

Front 222

T or F: Depreciation expense is a business operating expense

Back 222

TRUE

Front 223

T or F: When a plant asset is discarded, no notation needs to be made on the plant asset record

Back 223

FALSE

Front 224

T or F: The straight-line method of depreciation is used most often because it best meets the IRS regulations

Back 224

FALSE

Front 225

T or F: Because of land's permanent nature, it is not subject to depreciation

Back 225

TRUE

Front 226

T or F: Recording depreciation expense at the end of each fiscal period is an application of the accounting concept Matching Expenses with Revenue

Back 226

TRUE

Front 227

T or F: The actual value and book value of a plant asset are usually the same amount

Back 227

FALSE

Front 228

T or F: A gain or loss on plant assets is not recorded when one plant asset is traded for a similar plant asset

Back 228

TRUE

Front 229

T or F: At the time a plant asset is bought, the salvage value is only an estimated amount.

Back 229

TRUE

Front 230

T or F: Original cost, estimated useful lige, and miles driven in a year are the three factors considered when calculating annual depreciation expense.

Back 230

FALSE

Front 231

T or F: The actual cash paid is all that is ever considered as a plant asset's original cost

Back 231

FALSE

Front 232

T or F: The formula for calculating a plant asset's annual straight-line depreciation expense

Back 232

TRUE

Front 233

T or F: Three common ways of disposing of plant assets are discarding, selling, and trading

Back 233

TRUE

Front 234

T or F: If a plant asset is disposed of during a fiscal year, depreciation expense for part of a year is recorded

Back 234

TRUE

Front 235

T or F: All plant assets depreciate an equal amount each year

Back 235

FALSE

Front 236

All property not classified as real property

Back 236

Personal property

Front 237

An accounting form on which a businesss records information about each plant asset

Back 237

plant asset record

Front 238

The original cost of a plant asset minus accumulated depreciation

Back 238

book value of a plant asset

Front 239

charging an equal amount of depreciation expense for a plant asset in each year of useful life

Back 239

straight-line method of depreciation

Front 240

Multiplying the book value at the end of each fiscal period by a constant depreciation rate

Back 240

declining-balane method of depreciation

Front 241

Using fractions based on years of a plant asset's useful life

Back 241

sum-of-years-digits method of depreciation

Front 242

calculating estimated annual depreciation expense based the amount of production expected from a plant asset

Back 242

production-unit method of depreciation

Front 243

The decrease in the value of a plant asset because of the removal of a natural resource

Back 243

depletion

Front 244

land and anything attached to land

Back 244

real property

Front 245

The value of an asset determined by tax authorities for the purpose of calculating taxes

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assessed value

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A depreciation method required by the internal revenue service to be used for income tax calculation purposes for most plant assets placed in service after 1986

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modified accelerated cost recovery system