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ACC-Chapter 10
| Question | Answer |
|---|---|
| Accelerated Depreciation Method | Depreciation method that produces higher depreciation expense in the early years than in the later years |
| Additions and Improvements | Costs incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset |
| Amortization | The allocation of the cost of an intangible asset to expense over its useful life in a systematic and rational manner |
| Asset Turnover Ratio | A measure of how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets |
| Capital Expenditures | Expenditures that increase the company’s investment in productive facilities |
| Copyright | Exclusive grant from the federal government that allows the owner to reproduce and sell an artistic or published work |
| Declining Balance Method | Depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the useful life of the asset |
| Depletion | The allocation of the cost of a natural resource to expense in a rational and systematic manner over the resource’s useful life |
| Depreciation | The process of allocating to expense the cost of a plant asset over its useful life in a rational and systematic manner |
| Depreciable Cost | The cost of a plant asset less it salvage value |
| Franchise | A contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, provide specific services, or use certain trademarks or trade names, usually within a designated geographical area |
| Going Concern Assumption | States that the company will continue in operation for the foreseeable future |
| Goodwill | The value of all favorable attributes that relate to a business enterprise |
| Intangible Assets | Right, privileges, and competitive advantages that result from the ownership of long lived assets that do not possess physical substance |
| Licenses | Operating rights to use public property, granted to a business enterprise by a governmental agency |
| Materiality Principle | If an item would not make a difference in decision making, a company does not have to follow GAAP in reporting it |
| Natural Resources | Assets that consist of standing timber and underground deposits of oil, gas, or minerals |
| Ordinary Repairs | Expenditures to maintain the operating efficiency and productive life of the unit |
| Patent | An exclusive right issued by the US Patent Office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant |
| Plant Assets | Tangible resources that are used in the operations of the business and are not intended for sale to customers |
| Research and Development (R&D) Costs | Expenditures that may lead to patents, copyrights, new processes, or new products |
| Revenue Expenditures | Expenditures that are immediately charged against revenues as an expense |
| Salvage Value | An estimate of an asset’s value at the end of its useful life |
| Straight Line Method | Depreciation method in which periodic depreciation is the same for each year of the asset’s useful life |
| Trademark (Trade Name) | A word, phrase, jingle, or symbol that identifies a particular enterprise or product |
| Units of Activity Method | Depreciation method in which useful life is expressed in terms of the total units of production or use expected from an asset |
| Useful Life | An estimate of the expected productive life, also called service life, of an asset |
Created by:
JJACCOUNTING
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