Exam 4 Flashcards
Depreciation method that produces higher depreciation expense in the early years than in the later years.
Accelerated-depreciation method
Costs incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset.
Additions and improvements
The allocation of the cost of an intangible asset to expense over its useful life in a systematic and rational manner
Amoritization
A measure of how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets.
Asset turnover
Expenditures that increase the company’s investment in productive facilities.
Capital expenditures.
The fair value of the asset given up or the fair value of the asset received, whichever is more clearly determinable.
Cash equivalent price
Exclusive grant from the federal government that allows the owner to reproduce and sell an artistic or published work.
Copyrights
Depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the useful life of the asset.
Declining-balance method
The allocation of the cost of a natural resource in a rational and systematic manner over the resource’s useful life.
Depletion
The cost of a plant asset less its salvage value.
Depreciable cost
The process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner.
Depreciation
A contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, perform specific services, or use certain trademarks or trade names, usually within a designated geographic area.
Franchise (license)
The company will continue in operation for the forseeable future.
Going concern assumption
The value of all favorable attributes that relate to a company that is not attributable to any other specific asset.
Goodwill
A permanent decline in the fair value of an asset.
Impairment.
Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not posses sphysical substance.
Intangible assets
If an item would not make a difference in decision-making, a company does not have to follow GAAP in reporting it.
Materiality concept
Assets that consist of standing timber and underground deposits of oil, gas, and minerals.
Natural resources
Expenditures to maintain the operating efficiency and productive life of the long-lived asset.
Ordinary repairs
An exclusive right issued by the U.S. Patent Office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant.
Patent
Tangible resources that are used in the oeprations of the business and are not intended for sale to customers.
Plant assets
Expenditures that may lead to patents, copyrights, new processes, olr new products. These costs are expensed as incurred.
Research and development (R&D) costs
Expenditures that are immediately charged against revenues as an expense.
Revenue expenditures
An estimate of an asset’s value at the end of its useful life.
Salvage value
Depreciation method in which periodic depreciation is the same for each year of the asset’s useful life.
Straight-line method
A word, phrase, jingle, or symbol that identifies a particular enterprise or product.
Trademark (trade name)
Depreciation method in which useful life is expressed in terms of the total units of production or use expected from an asset.
Units-of-activity method
An estimate of the expected productive life, also called service life, of an asset.
Useful life.
Compensation to management and other personnel, based on factors such as increased sales or the amount of net income.
Bonus
A potential liability that may become an actual liability in the future.
Contingent liability
A measure of a company’s liquidity; computed as current assets divided by current liabilities.
Current ratio
A pension plan in which the benefits that the employee will receive at retirement are defined by the terms of the plan.
Defined-benefit plan
A pension plan in which the employer’s contribution to the plan is defined by the terms of the plan.
Defined-contribution plan
A cumulative record of each employee’s gross earnings, deductions, and net pay during the year.
Employee earnings record
A form that employees submit to their employers to indicate the number of allowances claimed.
Employee’s Withholding Allowance Certificate (Form W-4)
Taxes imposed on the employer by the federal government that provide benefits for a limited time period to employees who lose their jobs through no fault of their own.
Federal unemployment taxes
Payments made for the services of professionals
Fees
Taxes designed to provide workers with supplemental retirement, employment disability, and medical benefits.
FICA taxes
Total compensation earned by an employee.
Gross earnings
Gross earnings less payroll deductions.
Net pay
Obligations in the form of written notes.
Notes payable
Deductions from gross earnings to determine the amount of a paycheck.
Payroll deductions
A payroll record that accumulates the gross earnings, deductions, and net pay by employee for each pay period.
Payroll register
An agreement whereby an employer provides benefits to employees after they retire.
Pension plan
Payments by employers to retires employees for healthcare, life insurance, and pensions.
Postretirement benefits
Employee pay based on a specified amount rather than an hourly rate.
Salaries
A document attached to a paycheck that indicates the employee’s gross earnings, payroll deductions, and net pay.
Statement of earnings
Taxes imposed on the employer by states that provide benefits to employees who lose their jobs.
State unemployment taxes
A form showing gross earnings, FICA taxes withheld, and income taxes withheld, prepared annually by an employer for each employee.
Wage and Tax Statement (Form W-2)
Amounts paid to employees based on a rate per hour or on a piecework basis.
Wages
A measure of a company’s liquidity; computed as current assets minus current liabilities.
Working capital
Admission of a partner by investing assets in the partnership, causing both partnership net assets and total capital to increase.
Admission by investment
Admission of a partner in a personal transaction between one or more existing partners and the new partner; does not change total partnership assets or total capital.
Admission by purchase of an interest
A debit balance in a partner’s capital account after allocation of gain or loss.
Capital deficiency
Partners who have unlimited liability for the debts of the firm.
General partners
The basis for dividing net income and net loss in a partnership.
Income ratio
A form of business organization, usually classified as a partnership for tax purposes and usually with limited life, in which partners, who are called members, have limited liability.
Limited liability company
A partnership of professionals in which partners are given limited liability and the public is protected from malpractice by insurance carried by the partnership.
Limited liability partnership.
Partners whose liability for the debts of the firm is limited to their investment in the firm.
Limited partners
A partnership in which one or more general partners have unlimited liability and one or more partners have limited liability for the obligations of the firm.
Limited partnership
All partners have credit balances after allocation of gain or loss.
No capital deficiency.
The owners’ equity statement for a partnership which shows the changes in each partner’s capital account and in total partnership capital during the year.
Partners’ capital statement
An association of two or more persons to carry on as co-owners of a business for profit.
Partnership
A written contract expressing the voluntary agreement of two or more individuals in a partnership.
Partnership agreement
A change in partners dur to withdrawl or admission, which does not necessarily terminate the business.
Partnership dissolution
An event that ends both the legal and economic life of a partnership.
Partnership liquidation
A schedule showing the distribution of cash to the partners in a partnership liquidation.
Schedule of cash payments
Withdrawl of a partner in a personal transaction between partners; does not change total partnership assets or total capital.
Withdrawal by payment from partners’ personal assets
Withdrawal of a partner in a transaction involving the partnership, causing both partnership net assets and total capital to decrease.
Withdrawal by payment from partnership assets
