Horngren-s Financial and Managerial Accounting - Ch. 9 Exam Questions with Complete Solutions.

Horngren's Financial and Managerial Accounting - Ch. 9 Exam Questions with Complete Solutions Plant Assets - Correct Answers: Long-lived, tangible assets, such as land, buildings, and equipment, used in the operation of a business. Depreciation - Correct Answers: The process by which a business spreads the allocation of a plant asset's cost over its useful life. Cost Principle - Correct Answers: A principle that states that acquired assets and services should be recorder at their actual cost. Land Improvements - Correct Answers: A depreciable improvement to land, such as fencing, sprinklers, paving, signs, and lighting. Relative-Market-Value-Method - Correct Answers: A method of allocating the total cost (100%) of multiple assets purchased at one time. Total cost is divided among the assets according to their relative market values. Capital Expenditures - Correct Answers: An expenditure that increases the capacity or efficacy of a plant asset or extends its useful life. Capital expenditures are debited to an set account. Extraordinary Repair - Correct Answers: Repair work that generates a capital expenditure because it extends the asset's life past the normal expected life. Revenue Expenditure - Correct Answers: An expenditure that does not increase the capacity or efficiency of an asset or extend its useful life. Revenue expenditures are debited to an expense account. Obsolete - Correct Answers: An asset is considered obsolete when a newer asset can perform the job more efficiently than the old. Useful Life - Correct Answers: Length of the service period expected from an asset. May be expressed in time, such as months or years, or usage, such as units produced, hours used (for machinery), or miles driven (for a truck). Residual Value - Correct Answers: The expected value of a depreciable asset at the end of its useful life. Depreciable Cost - Correct Answers: The cost of a plant asset minus its estimated residual value. Book Value - Correct Answers: A depreciable asset's cost minus accumulated depreciation. Straight-Line Method - Correct Answers: A depreciation method that allocates an equal amount of depreciation each year. Units-of-Prduction Method - Correct Answers: A depreciation method that allocates a varying amount of depreciation each year based on the asset's usage. Accelerated Depreciation Methos - Correct Answers: A depreciation method that expenses more of an asset's cost neat the start of its useful life and less at the end of its useful life. Double-Declining-Balance Method - Correct Answers: An accelerated depreciation method that compares annual depreciation by multiplying the depreciable asset's decreasing book value by a constant percent that is 2 times the straight-line method. Modified Accelerated Cost Recovery System (MACRS) - Correct Answers: A depreciation method used for tac purposes Depletion - Correct Answers: The process by which a business spreads the allocation of a natural resource's cost over its usage. Natural Resource - Correct Answers: An asset the comes from the earth and is consumed. Intangible Asset - Correct Answers: An asset with no physical form that is valuable because of the special rights it carries. Amortization - Correct Answers: The process by which businesses spread the allocation of an intangible asset's cost over its useful life. Impairment - Correct Answers: A permanent decline in asset value Patent - Correct Answers: An intangible asset that is a federal government grant conveying an exclusive 20-year right to produce and sell a process, product, or formula. Copyright - Correct Answers: Exclusive right to reproduce and sell a book, musical, composition, film, other work of art, or intellectual property. Trademark - Correct Answers: An asset that represents distinctive identifications of a product or service. Franchise - Correct Answers: Privilege granted by a business to sell a product or service under specified conditions. License - Correct Answers: Privilege granted by a government to use public property in performing services. Goodwilll - Correct Answers: Excess of the cost of an acquired company over the sum of the market classes of its net assets (assets minus liabilities). Asset Turnover Ratio - Correct Answers: Measures how efficiently a business uses its average toal assets to generate sales (Net Sales/ Total Avg. Assets). Commercial Substance - Correct Answers: A characteristic of a transaction that causes a change in future cash flows.