WGU D104 Intermediate Accounting II Units
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4-6 questions with answers
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Asset Turnover Ratio - CORRECT ANSWERS ✔✔net sales/average
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total assets
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Profit Margin Ratio - CORRECT ANSWERS ✔✔net income/total
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sales
Rate of return on assets - CORRECT ANSWERS ✔✔net
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income/average total assets
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Current ratio - CORRECT ANSWERS ✔✔current assets/current
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liabilities
acid-test ratio - CORRECT ANSWERS ✔✔(cash + short-term
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investments + net receivables) / current liabilities
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rate of return on common stock equity - CORRECT ANSWERS
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✔✔(net income - preferred dividends) / average common
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stockholders' equity |\
payout ratio - CORRECT ANSWERS ✔✔cash dividends / (net
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income - preferred dividends)
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,book value per share - CORRECT ANSWERS ✔✔common
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stockholders' equity / outstanding shares |\ |\ |\ |\
sum-of-the-years'-digits method - CORRECT ANSWERS |\ |\ |\ |\ |\
✔✔Accelerated depreciation with higher depreciation cost in |\ |\ |\ |\ |\ |\ |\
beginning and lower charges in the end. Numerator is the # of
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years of est. life remaining at the 1st of the year, denominator is
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sum of the years individually. (e.g. 5/15, 4/15, 3/15, 2/15, 1/15)
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Variable charge depreciation method (activity method or units-of-
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activity/ production approach) - CORRECT ANSWERS ✔✔((cost -
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salvage value) X current units) / total estimated units
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activity method - CORRECT ANSWERS ✔✔(actual activity in
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period / total estimate activity) X (cost - salvage value)
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double declining balance method - CORRECT ANSWERS ✔✔An
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accelerated depreciation method that computes annual |\ |\ |\ |\ |\ |\
depreciation by multiplying the depreciable asset's decreasing
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book value by a constant percent that is two times the straight-
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line depreciation rate.
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Multiple assets group depreciation method - CORRECT ANSWERS
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✔✔Assets similar in nature and have approx. same useful lives.
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Total of the annual depreciation expense for all assets in the
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group / total cost of the assets.
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, Multiple assets composite depreciation method - CORRECT
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ANSWERS ✔✔Assets are dissimilar and have different lives. Total
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annual depreciation expense of all assets / total cost of all assets.
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Composite life - CORRECT ANSWERS ✔✔(Original cost - salvage
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value) / total annual depreciation
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Composite depreciation rate - CORRECT ANSWERS ✔✔Total
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annual depreciation of all assets / total cost of all assets.
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Journal entry for gain on sale of composite depreciation
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equipment - CORRECT ANSWERS ✔✔Debit cash & accumulated
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depreciation (subtract gain), credit equipment. |\ |\ |\ |\
Impairment - CORRECT ANSWERS ✔✔If the carrying amount
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exceeds the undiscounted future cash flows. Loss = carrying
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amount > fair value. |\ |\ |\
Journal entry for impairment - CORRECT ANSWERS ✔✔Debit
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impairment loss, credit accumulated depreciation
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When is the restoration of an impairment loss permitted? -
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CORRECT ANSWERS ✔✔When an assets is held for disposal.
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Impairment loss is reported at the lower of cost or net realizable
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value (fair value - cost to sell/dispose) not to exceed amount of
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initial impairment loss.
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4-6 questions with answers
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Asset Turnover Ratio - CORRECT ANSWERS ✔✔net sales/average
|\ |\ |\ |\ |\ |\ |\ |\
total assets
|\
Profit Margin Ratio - CORRECT ANSWERS ✔✔net income/total
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sales
Rate of return on assets - CORRECT ANSWERS ✔✔net
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income/average total assets
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Current ratio - CORRECT ANSWERS ✔✔current assets/current
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liabilities
acid-test ratio - CORRECT ANSWERS ✔✔(cash + short-term
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investments + net receivables) / current liabilities
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rate of return on common stock equity - CORRECT ANSWERS
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✔✔(net income - preferred dividends) / average common
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stockholders' equity |\
payout ratio - CORRECT ANSWERS ✔✔cash dividends / (net
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income - preferred dividends)
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,book value per share - CORRECT ANSWERS ✔✔common
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stockholders' equity / outstanding shares |\ |\ |\ |\
sum-of-the-years'-digits method - CORRECT ANSWERS |\ |\ |\ |\ |\
✔✔Accelerated depreciation with higher depreciation cost in |\ |\ |\ |\ |\ |\ |\
beginning and lower charges in the end. Numerator is the # of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
years of est. life 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) - CORRECT ANSWERS ✔✔((cost -
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salvage value) X current units) / total estimated units
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activity method - CORRECT ANSWERS ✔✔(actual activity in
|\ |\ |\ |\ |\ |\ |\ |\
period / total estimate activity) X (cost - salvage value)
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double declining balance method - CORRECT ANSWERS ✔✔An
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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 - CORRECT ANSWERS
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✔✔Assets similar in nature and have approx. same useful lives.
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Total of the annual depreciation expense for all assets in the
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group / total cost of the assets.
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, Multiple assets composite depreciation method - CORRECT
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ANSWERS ✔✔Assets are dissimilar and have different lives. Total
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annual depreciation expense of all assets / total cost of all assets.
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Composite life - CORRECT ANSWERS ✔✔(Original cost - salvage
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value) / total annual depreciation
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Composite depreciation rate - CORRECT ANSWERS ✔✔Total
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annual depreciation of all assets / total cost of all assets.
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Journal entry for gain on sale of composite depreciation
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equipment - CORRECT ANSWERS ✔✔Debit cash & accumulated
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depreciation (subtract gain), credit equipment. |\ |\ |\ |\
Impairment - CORRECT ANSWERS ✔✔If the carrying amount
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exceeds the undiscounted future cash flows. Loss = carrying
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amount > fair value. |\ |\ |\
Journal entry for impairment - CORRECT ANSWERS ✔✔Debit
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impairment loss, credit accumulated depreciation
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When is the restoration of an impairment loss permitted? -
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CORRECT ANSWERS ✔✔When an assets is held for disposal.
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Impairment loss is reported at the lower of cost or net realizable
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value (fair value - cost to sell/dispose) not to exceed amount of
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initial impairment loss.
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