IAAO 500 Glossary Exam Questions and Correct Answers Latest Update (Graded A+)
Acquisition Cost - Answers The cost used in accounting to represent the purchase price of an asset. If
installation and other associated costs are included, it should be referred to as total acquisition cost.
Bill and Hold Goods - Answers A type of inventory that has been invoiced by not shipped from the seller
to the buyer.
Chattel - Answers An item of tangible movable or immovable property except real estate, freehold, and
things (such as buildings) connected with real property. A synonym for personal property.
Consigned Goods - Answers A type of inventory in the possession of a selling agent but owned by
another party. The seller has no equity, no control of price or sale, and receives none of the profit (as
such) from sale of the property (but may receive a sales commission).
Construction In Progress - Answers Property that is in a process of change from one state to another,
such as the conversion of personal property from inventory to fixed asset by installation or the
conversion of personalty to realty by becoming a fixture.
Discovery - Answers The process by whereby the assessor identifies all taxable property in this
jurisdiction and ensures that it is included on the assessment role.
Economic Life - Answers The period of time over which an asset's operation is economically feasible. The
economic life may or may not be equivalent to physical life of the asset.
External (Economic) Obsolescence - Answers The loss in appraisal value (relative to the cost of replacing
it with property of equal utility) resulting from causes outside the property suffering the loss. Usually
locational in nature in depreciation of real estate; it is more commonly market wide in personal property
and is generally considered to be economically unfeasible to cure.
Effective Age - Answers An age assigned to an asset based on a combination of its actual age and
condition.
Effective Tax Rate - Answers The relationship between dollars of tax and dollars of market value of a
property. It may be calculated by either dividing tax by value or by multiplying a property's assessment
level times its nominal tax rate.
Finished Goods - Answers Inventory at the end stage of a manufacturing process. Finished goods are the
result of combining raw materials with labor, capital, machine time, and other components of
production.
First In first Out (FIFO) - Answers An inventory cost procedure in accounting whereby unsold inventory
including inventory carried over from prior years, is valued at the prices most recently paid for inventory
purchases.
Acquisition Cost - Answers The cost used in accounting to represent the purchase price of an asset. If
installation and other associated costs are included, it should be referred to as total acquisition cost.
Bill and Hold Goods - Answers A type of inventory that has been invoiced by not shipped from the seller
to the buyer.
Chattel - Answers An item of tangible movable or immovable property except real estate, freehold, and
things (such as buildings) connected with real property. A synonym for personal property.
Consigned Goods - Answers A type of inventory in the possession of a selling agent but owned by
another party. The seller has no equity, no control of price or sale, and receives none of the profit (as
such) from sale of the property (but may receive a sales commission).
Construction In Progress - Answers Property that is in a process of change from one state to another,
such as the conversion of personal property from inventory to fixed asset by installation or the
conversion of personalty to realty by becoming a fixture.
Discovery - Answers The process by whereby the assessor identifies all taxable property in this
jurisdiction and ensures that it is included on the assessment role.
Economic Life - Answers The period of time over which an asset's operation is economically feasible. The
economic life may or may not be equivalent to physical life of the asset.
External (Economic) Obsolescence - Answers The loss in appraisal value (relative to the cost of replacing
it with property of equal utility) resulting from causes outside the property suffering the loss. Usually
locational in nature in depreciation of real estate; it is more commonly market wide in personal property
and is generally considered to be economically unfeasible to cure.
Effective Age - Answers An age assigned to an asset based on a combination of its actual age and
condition.
Effective Tax Rate - Answers The relationship between dollars of tax and dollars of market value of a
property. It may be calculated by either dividing tax by value or by multiplying a property's assessment
level times its nominal tax rate.
Finished Goods - Answers Inventory at the end stage of a manufacturing process. Finished goods are the
result of combining raw materials with labor, capital, machine time, and other components of
production.
First In first Out (FIFO) - Answers An inventory cost procedure in accounting whereby unsold inventory
including inventory carried over from prior years, is valued at the prices most recently paid for inventory
purchases.
