Financial Accounting- Tools for Business Decision Making - Chapter 9 Exam Questions Answered
Correctly (Already Passed)
Accelerated-depreciation method - Answers A depreciation method that produces higher depreciation
expense in the early years than the straight-line approach.
Additions and improvements - Answers Costs incurred to increase the operating efficiency, productive
capacity, or expected useful life of a plant asset.
Amortization - Answers The process of allocating to expense the cost of an intangible asset.
Asset turnover - Answers Indicates how efficiently a company uses its assets to generate sales;
calculated as net sales divided by average total assets.
Capital expenditures - Answers Expenditures that increase the company's investment in plant assets.
Capital lease - Answers A contractual agreement allowing one party (the lessee) to use another party's
asset (the lessor); accounted for like a debt-financed purchase by the lessee.
Cash equivalent price - Answers An amount equal to the fair value of the asset given up or the fair value
of the asset received, whichever is more clearly determinable.
Copyright - Answers An exclusive right granted by the federal government allowing the owner to
reproduce and sell an artistic or published work.
Declining-balance method - Answers A depreciation method that applies a constant rate to the declining
book value of the asset and produces a decreasing annual depreciation expense over the asset's useful
life.
Depreciable cost - Answers The cost of a plant asset less its salvage value.
Depreciation - Answers The process of allocating to expense the cost of a plant asset over its useful life
in a rational and systematic manner.
Franchise - Answers A contractual arrangement under which the franchisor grants the franchisee the
right to sell certain products, to perform specific services, or to use certain trademarks or trade names,
usually within a designated geographic area.
Goodwill - Answers The value of all favorable attributes that relate to a company that are not
attributable to any other specific asset.
Impairment - Answers A permanent decline in the fair value of an asset.
Intangible assets - Answers Rights, privileges, and competitive advantages that result from the
ownership of long-lived assets that do not possess physical substance.
Correctly (Already Passed)
Accelerated-depreciation method - Answers A depreciation method that produces higher depreciation
expense in the early years than the straight-line approach.
Additions and improvements - Answers Costs incurred to increase the operating efficiency, productive
capacity, or expected useful life of a plant asset.
Amortization - Answers The process of allocating to expense the cost of an intangible asset.
Asset turnover - Answers Indicates how efficiently a company uses its assets to generate sales;
calculated as net sales divided by average total assets.
Capital expenditures - Answers Expenditures that increase the company's investment in plant assets.
Capital lease - Answers A contractual agreement allowing one party (the lessee) to use another party's
asset (the lessor); accounted for like a debt-financed purchase by the lessee.
Cash equivalent price - Answers An amount equal to the fair value of the asset given up or the fair value
of the asset received, whichever is more clearly determinable.
Copyright - Answers An exclusive right granted by the federal government allowing the owner to
reproduce and sell an artistic or published work.
Declining-balance method - Answers A depreciation method that applies a constant rate to the declining
book value of the asset and produces a decreasing annual depreciation expense over the asset's useful
life.
Depreciable cost - Answers The cost of a plant asset less its salvage value.
Depreciation - Answers The process of allocating to expense the cost of a plant asset over its useful life
in a rational and systematic manner.
Franchise - Answers A contractual arrangement under which the franchisor grants the franchisee the
right to sell certain products, to perform specific services, or to use certain trademarks or trade names,
usually within a designated geographic area.
Goodwill - Answers The value of all favorable attributes that relate to a company that are not
attributable to any other specific asset.
Impairment - Answers A permanent decline in the fair value of an asset.
Intangible assets - Answers Rights, privileges, and competitive advantages that result from the
ownership of long-lived assets that do not possess physical substance.
