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24 Cards in this Set
- Front
- Back
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accelerated depreciation methods |
a depreciation method that writes off a relatively larger amount of asset's cost nearer the start of its useful life than the straight line method does |
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amortization |
the systematic reduction of a lump sum amount. expense that applies to intangible assets in the same way depreciation applies to plant assets and depletion applies to natural resources |
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capital expenditure |
expenditure that increases an asset's capacity or extends its useful life. capital expenditures are debited to an asset account |
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copyright |
exclusive right to reproduce and sell a book, musical composition, film other work of art, or computer program. issued by the federal government, copyrights extend 70 years beyond the author's life |
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depletion |
the portion of a natural resource's cost that is used up in a particular period. depletion expense is computed in the same way as units or production depreciation. a depleted asset usually flows into inventory and eventually to cost of goods sold as the resource is sold |
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depreciable cost |
the cost of a plant asset minus its estimated residual value |
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double declining balance |
an accelerated depreciation method that computes annual depreciation by multiplying the asset's decreasing book value at the beginning of the year by a constant percentage, which is two time the straight line rate |
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duPont analysis |
a detailed approach to measuring the rate of return on equity (net income/net sales) x (net sales/average totaly assests) |
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estimated residual value/residual value/scrap value/ salvage value |
expected cash value of an asset at the end of its useful life |
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estimated useful life |
length of service that a business expects to get from an asset. may be expressed in years, units of output, mile |
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fair value |
the asset's estimated market value at a particular date |
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franchises and licenses |
privieges granted by a private business or a government to sell a product or service in accordance with specified conditions |
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goodwill |
excess of the cost of an acquired company over the sum of the market values of its net assets |
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impairment |
the condition that exists when the carrying amount of a long-lived asset exceeds the amount of the future cash flows from the asset |
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intangible asset |
an asset with no physical form-a special right to current and expected future benefits |
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Modified accelerated cost recovery systems |
a special depreciation method used only for income tax purposes. assests are grouped into classes, and for a given balance method, the 150% declining balance method, or for most real estate, the straight line method |
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net profit margin ratio |
computed by the formula net income/net sales. this ratio measures the portion of each net sales dollar generated in the net profit |
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patent |
a federal government grant giving the holder the exclusive rights for 20 yeears to produce and sell an invention |
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plant/fixed assets |
long-lived assets, such as land, buildings, and equipment, used in the operation of the business |
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return on assets |
measures how profitably management has used the assets that stockholders and creditors have provided the company |
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straight line method |
depreciation method in which and equal amount of depreciation expense is assigned to each year of asset use |
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total asset turnover |
a measure of efficiency in usage of total assets. the ratio calculates how many times per year average total assets are covered by net sales net sales/ave total assets |
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trademark/tradename |
a distinctive identification of a product or service |
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units of production method |
depreciation method by which a fixed amount of depreciation is assigned to each unit of output produced by the plant asset |
