Learn Smarts: Chapter 9 – Flashcards
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The book keeper forgot to record the depreciation for the year, this error will report in:
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assets to be overstated, stockholder's equity to be overstated
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which account is credited in a journal entry to record depreciation on machinery?
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accumulated depreciation
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another term for long-lived tangible assets is ________ assets, and is found on the financial statement called the _____ ______
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fixed, balance sheet
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sunny sky paid 30,000 cash for piece of land to be used for new corporate headquarters building. what is the effect of this transaction on the accounting equation?
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one asset increases, while another asset decreases
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what is the effect of recording depreciation expense on the accounting equation?
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total assets decrease, total stockholder's equity decrease
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t or f: long-lived assets (except land) are expensed over their useful life
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true
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formula for fixed asset turnover ratio
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net sales / average fixed assets
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company amortizes its patent of 20,000 over 20 years. adjusting entry to record amortization results in:
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decrease to assets on balance sheet, decrease to net income on income statement
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company buys machine for 2500. Will use it for 4 years then sell for 200. What is the depreciable cost?
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2300
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asset cost - residual value
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depreciable cost
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The estimated amount an asset can be sold for at the end of its useful life. The same as salvage value.
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residual value
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when recording losses on the sale of a fixed asset, the account, loss on disposal, is increased with a _____
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debit
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when you sell a good and receive less cash than book value
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decrease to assets, decrease to stockholders equity
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assuming straight line depreciation is used, a higher estimated useful life will result in a _____ depreciation expense per year and a _______ net income
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lower, higher
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amortization is an adjusting entry that records the amount of
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intangible assets' usefulness used during the accounting period
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company amortizes its patents over ten years. the entry to record amortization may include
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debit to amortization expense, credit to accumulated amortization
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when does impairment occur?
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when the future cash flow expected from using an asset is less than the asset's book value
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(cost- residual value) - (actual production/ estimated production) is the formula for calculating _________ depreciation
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units of production
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execs at company committed an $11 billion dollar fraud by capitalizing costs that should have been expensed. What is the effect on the company's income statement?
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net income was too high, expenses were too low
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company sold truck for more than book value. which financial statements will be effected?
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balance sheet, income statement, statement of cash flows, statement of retained earnings
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the write-down of good will due to impairment will cause
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net income to decrease, intangible assets to decrease
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assets cost minus its accumulated depreciation is its ______ value
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book
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loss on impairment is a(an)
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operating expense that appears on the income statement
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the straight-line depreciation method
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reports an equal amount of depreciation expense each year
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the write down of goodwill for impairment will effect which of the following financial statements?
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income statement, balance sheet
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what is the formula for calculating double declining balance method?
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(cost -accumulated depreciation) x 2/useful life
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the journal entry to record amortization expense includes a ______ to amortization expense
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debit
