Accounting 2 - Revenues & Expenses - Accounting For Assets Flashcards
Cost accounting
is the process of determining how much a unit of inventory costs. (Inventory)
Cost of Goods Sold (COGS)
is the expense account associated with the sale of inventory. (Inventory)
Specific identification
is the method of accounting for the cost of inventory by expensing inventory sales as they occur. (Inventory)
First-in, first-out (FIFO)
is the method of accounting for the cost of inventory by expensing the cost of the oldest inventory first. (Inventory)
Last-in, first-out (LIFO)
is the method of accounting for the cost of inventory by expensing the cost of the newest inventory first. (Inventory)
Conversion costs
include direct labor and overhead costs for producing a good or service. (Inventory)
Production overhead
is an indirect cost that includes allgeneral costs of the production process, minus direct costs (direct labor and raw materials) and SG&A activities. (Inventory)
Overhead rate
distributes the overhead costs to inventory based on metrics such as labor costs, labor hours, etc. (Inventory)
Direct Costs
material costs, labor costs. (Inventory)
Conversions Costs
labor costs, overhead costs. (Inventory)
Indirect Costs
overhead costs. (Inventory)
Fixed assets
are tangible noncurrent assets.
Service life
is the expected amount of time (often estimated by a tax authority) a fixed asset will remain useful before succumbing to wear-and-tear or obsolescence.
Depreciation
is the means by which the cost of a fixed asset is expensed over time. (Depreciation)
Depreciation expense
is the amount of depreciation assigned to an asset each accounting period. (Depreciation)
Straight-line depreciation
is a method of depreciating an asset in equal amounts each accounting period of the asset?s service life. (Depreciation)
Units of production
is a method of assigning depreciation based on the output of an asset. (Depreciation)
Book value
The difference between an asset?s cost and its accumulated depreciation is its…. (Depreciation)
Gain (Loss) on Asset Disposal
The difference between the sale value of an asset and its book value is recorded in the equity account. (Depreciation)
Wasting assets
are natural resources, such as wells and mines, that undergo depletion. (Depletion and Amortization)
Depletion occurs as
wasting assets are used up. (Depletion and Amortization)
Depletion base
is the total value of a wasting asset that will undergo depletion (Similar to an asset?s depreciable cost). (Depletion and Amortization)
Depletion rate
equals the depletion base divided by the total number of units of substance that will be extracted from a resource. (Depletion and Amortization)
Amortization
is the process by which intangible assets are expensed over time in accordance with the matching concept. (Depletion and Amortization)
