WSU Accounting 230 Exam 3 Questions And Answers Rated A+ 2024.

WSU Accounting 230 Exam 3 Questions And Answers Rated A+ 2024. Recording an expenditure as an asset if it increases future benefits; if it only increase benefits during the current period then we label it as an expense. - correct answer. What does the term "capitalize" mean? Land, land improvements, buildings, equipment, and natural resources. - correct answer. What is included in Plant, Property, and Equipment? The long term asset at its cost, plus all expenditures necessary to prepare the asset for use. - correct answer. What is included in the value of a long-term asset to record on the balance sheet? Purchase price of land, commissions, back property taxes, title insurance, cost of removing an existing building, cost of leveling the land, less: salvaged materials. - correct answer. When purchasing land, how do you calculate the amount to be recorded? $6,000. - correct answer. If $8,000 ($6,000 in back taxes and $2,000 due for the current fiscal year) in Property Taxes are paid on a price of land after purchase, what amount is included in the total cost of the land? No; since land improvements (sprinklers, sidewalks, driveway, etc.) do not last forever, they are not included. - correct answer. Are land improvements recorded with land? The purchase of more than one asset at the same time for a single purchase price. - correct answer. What is a basket purchase? Estimated Fair Value x Allocation Percentage x Basket Purchase Cost = Recorded Amount - correct answer. How do you determine the value of individual accounts from a basket purchase? Copyrights, patents, franchises, trademarks, and goodwill. - correct answer. What are types of Intangible Assets? 1. Purchase Intangible Assets from other companies. 2. Develop Intangible Assets internally. - correct answer. How can companies acquire Intangible Assets (2 different ways)? The original cost plus all other costs (such as legal fees) necessary to prepare the asset for use; recorded under assets. - correct answer. How do you record/value Intangible Assets that are purchased from other companies to record? Expense the costs for developing the intangible asset as you incur the costs. - correct answer. How do you record Intangible Assets that are developed internally? Additions, improvements (replacements), major repairs that increase future benefits, and legal defense of intangible assets. - correct answer. What expenditures are *capitalized* after the acquisition of an asset? Routine repairs and maintenance. - correct answer. What expenditures are *expensed* after the acquisition of an asset? Expensed as they are incurred. - correct answer. How are research and development costs recorded? A contra-asset account. - correct answer. What type of account is Accumulated Depreciation? Debit: Depreciation Expense Credit: Accumulated Depreciation - correct answer. Journalize annual depreciation cost. (Asset's Cost - Residual Value) / Service Life - correct answer. How do you calculate annual depreciation expense? Patents, copyrights, trademarks, and franchises. - correct answer. Which intangible assets are subject to amortization? Goodwill and trademarks. - correct answer. Which intangible assets are not subject to amortization? Sale Amount - Book Value (Book Value = Original Cost - Accumulate Depreciation) = Gain or Loss - correct answer. How do you calculate the gain or loss on the disposal (sale, retirement, exchange) of an asset? Debit: Cash Debit: Accumulated Depreciation Credit: Equipment Credit: Gain - correct answer. Journalize a gain on the sale of equipment. Debit: Cash Debit: Accumulated Depreciation Debit: Loss Credit: Equipment - correct answer. Journalize a loss on the sale of equipment. Debit: Accumulated Depreciation Debit: Loss Credit: Equipment - correct answer. Journalize a loss on the retirement of equipment. Debit: Equipment (new) Debit: Accumulated Depreciation (on old) Credit: Cash Credit: Equipment (old) Credit: Gain - correct answer. Journalize a gain on the exchange of equipment. Net income / Average total assets Profit made per dollar of assets. - correct answer. What is the calculation to find the Return on Assets? What does this mean? Net income / Net sales Earnings per dollar of sale. - correct answer. What is the calculation to find the Profit Margin? What does this mean? Net Sales / Average total assets Sales per dollar of assets. - correct answer. What is the calculation to find the Asset Turnover? Short term liabilities are generally payable within one year, whereas long-term liabilities are payable more than one year from now. - correct answer. What is the primary difference between long term and short term liabilities? Interest = Face Value x Annual interest rate x Fraction of the year - correct answer. How do you calculate interest on notes? Long term; except when they become payable within the upcoming year. - correct answer. Are notes, mortgages, and bonds usually recorded as long-term or short-term liabilities? An existing situation that might result in a loss depending on the outcome of a future event; such as a lawsuit or a warranty. - correct answer. What is a contingent liability? When the liability payment is probable and reasonably estimated. - correct answer. When do you record a contingent liability? When the liability payment is reasonably possible and reasonably estimable.