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WGU D104 Intermediate Accounting II Units
4-6 Exam Questions And Answers 100% Pass
Asset Turnover Ratio - ANS net sales/average total assets
Profit Margin Ratio - ANS net income/total sales
Rate of return on assets - ANS net income/average total assets
Current ratio - ANS current assets/current liabilities
acid-test ratio - ANS (cash + short-term investments + net receivables) / current liabilities
rate of return on common stock equity - ANS (net income - preferred dividends) / average
common stockholders' equity
payout ratio - ANS cash dividends / (net income - preferred dividends)
book value per share - ANS common stockholders' equity / outstanding shares
sum-of-the-years'-digits method - ANS Accelerated depreciation with higher depreciation
cost in beginning and lower charges in the end. Numerator is the # of years of est. life
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remaining at the 1st of the year, denominator is sum of the years individually. (e.g. 5/15, 4/15,
3/15, 2/15, 1/15)
Variable charge depreciation method (activity method or units-of-activity/ production
approach) - ANS ((cost - salvage value) X current units) / total estimated units
activity method - ANS (actual activity in period / total estimate activity) X (cost - salvage
value)
double declining balance method - ANS An accelerated depreciation method that computes
annual depreciation by multiplying the depreciable asset's decreasing book value by a constant
percent that is two times the straight-line depreciation rate.
Multiple assets group depreciation method - ANS Assets similar in nature and have approx.
same useful lives. Total of the annual depreciation expense for all assets in the group / total
cost of the assets.
Multiple assets composite depreciation method - ANS Assets are dissimilar and have
different lives. Total annual depreciation expense of all assets / total cost of all assets.
Composite life - ANS (Original cost - salvage value) / total annual depreciation
Composite depreciation rate - ANS Total annual depreciation of all assets / total cost of all
assets.
Journal entry for gain on sale of composite depreciation equipment - ANS Debit cash &
accumulated depreciation (subtract gain), credit equipment.
Impairment - ANS If the carrying amount exceeds the undiscounted future cash flows. Loss =
carrying amount > fair value.
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Journal entry for impairment - ANS Debit impairment loss, credit accumulated depreciation
When is the restoration of an impairment loss permitted? - ANS When an assets is held for
disposal. Impairment loss is reported at the lower of cost or net realizable value (fair value -
cost to sell/dispose) not to exceed amount of initial impairment loss.
Depletion base for natural resources - ANS (cost to acquire + cost to explore + cost to
develop i.e. intangible costs + cost to restore). Tangible costs to extract resources depreciated
separately.
Natural resources depletion rate - ANS (depletion base - salvage value) / total units to be
recovered.
Natural resources depletion expense - ANS (depletion rate X units of usage) / extracted
Journal entry to record ore extracted - ANS Debit inventory (ore), credit mineral mine
Journal entry to record the ore sold - ANS Debit cost of goods sold, credit inventory (ore)
Journal entry to record depletion expense for mine - ANS Debit depletion expense, credit
accumulated depletion
Types of current liabilities - ANS Accounts payable, notes payable, dividends payable,
customer advances/deposits, unearned (deferred) revenues, sales tax payable, current
maturities of long-term debt
Journal entry to record issuance of a note - ANS Debit cash, credit notes payable
WGU D104 Intermediate Accounting II Units
4-6 Exam Questions And Answers 100% Pass
Asset Turnover Ratio - ANS net sales/average total assets
Profit Margin Ratio - ANS net income/total sales
Rate of return on assets - ANS net income/average total assets
Current ratio - ANS current assets/current liabilities
acid-test ratio - ANS (cash + short-term investments + net receivables) / current liabilities
rate of return on common stock equity - ANS (net income - preferred dividends) / average
common stockholders' equity
payout ratio - ANS cash dividends / (net income - preferred dividends)
book value per share - ANS common stockholders' equity / outstanding shares
sum-of-the-years'-digits method - ANS Accelerated depreciation with higher depreciation
cost in beginning and lower charges in the end. Numerator is the # of years of est. life
, ©EVERLY 2025 ALL RIGHTS RESERVED
remaining at the 1st of the year, denominator is sum of the years individually. (e.g. 5/15, 4/15,
3/15, 2/15, 1/15)
Variable charge depreciation method (activity method or units-of-activity/ production
approach) - ANS ((cost - salvage value) X current units) / total estimated units
activity method - ANS (actual activity in period / total estimate activity) X (cost - salvage
value)
double declining balance method - ANS An accelerated depreciation method that computes
annual depreciation by multiplying the depreciable asset's decreasing book value by a constant
percent that is two times the straight-line depreciation rate.
Multiple assets group depreciation method - ANS Assets similar in nature and have approx.
same useful lives. Total of the annual depreciation expense for all assets in the group / total
cost of the assets.
Multiple assets composite depreciation method - ANS Assets are dissimilar and have
different lives. Total annual depreciation expense of all assets / total cost of all assets.
Composite life - ANS (Original cost - salvage value) / total annual depreciation
Composite depreciation rate - ANS Total annual depreciation of all assets / total cost of all
assets.
Journal entry for gain on sale of composite depreciation equipment - ANS Debit cash &
accumulated depreciation (subtract gain), credit equipment.
Impairment - ANS If the carrying amount exceeds the undiscounted future cash flows. Loss =
carrying amount > fair value.
, ©EVERLY 2025 ALL RIGHTS RESERVED
Journal entry for impairment - ANS Debit impairment loss, credit accumulated depreciation
When is the restoration of an impairment loss permitted? - ANS When an assets is held for
disposal. Impairment loss is reported at the lower of cost or net realizable value (fair value -
cost to sell/dispose) not to exceed amount of initial impairment loss.
Depletion base for natural resources - ANS (cost to acquire + cost to explore + cost to
develop i.e. intangible costs + cost to restore). Tangible costs to extract resources depreciated
separately.
Natural resources depletion rate - ANS (depletion base - salvage value) / total units to be
recovered.
Natural resources depletion expense - ANS (depletion rate X units of usage) / extracted
Journal entry to record ore extracted - ANS Debit inventory (ore), credit mineral mine
Journal entry to record the ore sold - ANS Debit cost of goods sold, credit inventory (ore)
Journal entry to record depletion expense for mine - ANS Debit depletion expense, credit
accumulated depletion
Types of current liabilities - ANS Accounts payable, notes payable, dividends payable,
customer advances/deposits, unearned (deferred) revenues, sales tax payable, current
maturities of long-term debt
Journal entry to record issuance of a note - ANS Debit cash, credit notes payable
