Business Accounting And Financial Information
This discussion is about business accounting and financial information.
Fixed assets are ordinarily presented in the balance sheet
in a separate section along with intangible assets
A characteristic of a fixed asset is that it is
used in the operations of a business
Land acquired so it can be resold in the future is listed in the balance sheet as an
Insurance costs during construction
are included in the constructing of a building
Brokerage commissions
are included in the cost of the land
Accumulated depreciation
is a contra asset account
Expenditures that add to the utility of fixed assets for more than one accounting period are
capital expenses
All leases are classified as either
capital leases or operating leases
A fixed asset’s estimated value at the time it is to be retired from service is called
residual value
All of the following: cost, estimated life, residual value are needed for the calculation of straight line depreciation but not
units produced
The method of determing depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is
declining balance
The most widely used depreciation method is
straight line
Fixed assets are ordinarily presented in the balance sheet
in a separate section along with intangible assets
The depreciation method that does not use residual value in calculating the first year’s depreciation expense is
double declining balance
Residual value is also known as scrap, tradein, salvage but not
net book value
Expected useful life is
estimated at the time the asset is placed in service
The accumulated depletion account is
reported on the balance sheet as a deduction from the cost of the mineral deposit
The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called
depletion
Expenditures for research and development are generally recorded as
current operating expenses
The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is
amortization
The exclusive right to use a certain name or symbol is called a
trademark
Fixed assets are ordinarily presented in the balance sheet
in a separate section along with intangible assets
Current liabilities are
due and payable in one year
On June 8, 120 day note would be what due date:
October 6
A current liability is a debt that can be reasonably expected to be paid
within one year
Unearned rent
would most likely be classified as a current liability
The current portion of long-term debt should
be reclassified as a current liability
accounting
planning, recording, analyzing, and interpreting financial information
accounting system
a planned process for providing financial information that will be useful to management
accounting records
organized summaries of a business’s financial activities
financial reports that summarize the financial condition and operations of a business
service business
a business that performs an activity for a fee
proprietorship
a business owned by one person
Fixed assets are ordinarily presented in the balance sheet
in a separate section along with intangible assets
asset
anything of value that is owned
equities
financial rights to the assets of a business
liability
an amount owed by a business
owners equity
the amount remaining after the value of all liabilities is subtracted from the value of all assets
an equation showing the relationship among assets, liabilities, and owner’s equity
the principles of right and wrong that guide an individual in making decisions
business ethics
the use of ethics in making business decisions
transaction
a business activity that changes assets, liabilities, or owner’s equity
account
a record summarizing all the information pertaining to a single item in the accounting equation
account title
the name given to an account
account balance
the amount in an account
capital
the account used to summarize the owner’s equity in a business
revenue
an increase in owner’s equity resulting from the operation of a business
Fixed assets are ordinarily presented in the balance sheet
in a separate section along with intangible assets
sale on account
a sale for which cash will be received at a later date
expense
a decrease in owner’s equity resulting from the operation of a business
withdrawals
assets taken out of a business for the owner’s personal use