Exam 4

Question 1

Depreciation method that produces higher depreciation expense in the early years than in the later years.

Answer 1

Accelerated-depreciation method

Question 2

Costs incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset.

Answer 2

Additions and improvements

Question 3

The allocation of the cost of an intangible asset to expense over its useful life in a systematic and rational manner

Answer 3

Amoritization

Question 4

A measure of how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets.

Answer 4

Asset turnover

Question 5

Expenditures that increase the company’s investment in productive facilities.

Answer 5

Capital expenditures.

Question 6

The fair value of the asset given up or the fair value of the asset received, whichever is more clearly determinable.

Answer 6

Cash equivalent price

Question 7

Exclusive grant from the federal government that allows the owner to reproduce and sell an artistic or published work.

Answer 7

Copyrights

Question 8

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.

Answer 8

Declining-balance method

Question 9

The allocation of the cost of a natural resource in a rational and systematic manner over the resource’s useful life.

Answer 9

Depletion

Question 10

The cost of a plant asset less its salvage value.

Answer 10

Depreciable cost

Question 11

The process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner.

Answer 11

Depreciation

Question 12

A contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, perform specific services, or use certain trademarks or trade names, usually within a designated geographic area.

Answer 12

Franchise (license)

Question 13

The company will continue in operation for the forseeable future.

Answer 13

Going concern assumption

Question 14

The value of all favorable attributes that relate to a company that is not attributable to any other specific asset.

Answer 14

Goodwill

Question 15

A permanent decline in the fair value of an asset.

Answer 15

Impairment.

Question 16

Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not posses sphysical substance.

Answer 16

Intangible assets

Question 17

If an item would not make a difference in decision-making, a company does not have to follow GAAP in reporting it.

Answer 17

Materiality concept

Question 18

Assets that consist of standing timber and underground deposits of oil, gas, and minerals.

Answer 18

Natural resources

Question 19

Expenditures to maintain the operating efficiency and productive life of the long-lived asset.

Answer 19

Ordinary repairs

Question 20

An exclusive right issued by the U.S. 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.

Answer 20

Patent

Question 21

Tangible resources that are used in the oeprations of the business and are not intended for sale to customers.

Answer 21

Plant assets

Question 22

Expenditures that may lead to patents, copyrights, new processes, olr new products. These costs are expensed as incurred.

Answer 22

Research and development (R&D) costs

Question 23

Expenditures that are immediately charged against revenues as an expense.

Answer 23

Revenue expenditures

Question 24

An estimate of an asset’s value at the end of its useful life.

Answer 24

Salvage value

Question 25

Depreciation method in which periodic depreciation is the same for each year of the asset's useful life.

Answer 25

Straight-line method

Question 26

A word, phrase, jingle, or symbol that identifies a particular enterprise or product.

Answer 26

Trademark (trade name)

Question 27

Depreciation method in which useful life is expressed in terms of the total units of production or use expected from an asset.

Answer 27

Units-of-activity method

Question 28

An estimate of the expected productive life, also called service life, of an asset.

Answer 28

Useful life.

Question 29

Compensation to management and other personnel, based on factors such as increased sales or the amount of net income.

Answer 29

Bonus

Question 30

A potential liability that may become an actual liability in the future.

Answer 30

Contingent liability

Question 31

A measure of a company's liquidity; computed as current assets divided by current liabilities.

Answer 31

Current ratio

Question 32

A pension plan in which the benefits that the employee will receive at retirement are defined by the terms of the plan.

Answer 32

Defined-benefit plan

Question 33

A pension plan in which the employer's contribution to the plan is defined by the terms of the plan.

Answer 33

Defined-contribution plan

Question 34

A cumulative record of each employee's gross earnings, deductions, and net pay during the year.

Answer 34

Employee earnings record

Question 35

A form that employees submit to their employers to indicate the number of allowances claimed.

Answer 35

Employee's Withholding Allowance Certificate (Form W-4)

Question 36

Taxes imposed on the employer by the federal government that provide benefits for a limited time period to employees who lose their jobs through no fault of their own.

Answer 36

Federal unemployment taxes

Question 37

Payments made for the services of professionals

Answer 37

Fees

Question 38

Taxes designed to provide workers with supplemental retirement, employment disability, and medical benefits.

Answer 38

FICA taxes

Question 39

Total compensation earned by an employee.

Answer 39

Gross earnings

Question 40

Gross earnings less payroll deductions.

Answer 40

Net pay

Question 41

Obligations in the form of written notes.

Answer 41

Notes payable

Question 42

Deductions from gross earnings to determine the amount of a paycheck.

Answer 42

Payroll deductions

Question 43

A payroll record that accumulates the gross earnings, deductions, and net pay by employee for each pay period.

Answer 43

Payroll register

Question 44

An agreement whereby an employer provides benefits to employees after they retire.

Answer 44

Pension plan

Question 45

Payments by employers to retires employees for healthcare, life insurance, and pensions.

Answer 45

Postretirement benefits

Question 46

Employee pay based on a specified amount rather than an hourly rate.

Answer 46

Salaries

Question 47

A document attached to a paycheck that indicates the employee's gross earnings, payroll deductions, and net pay.

Answer 47

Statement of earnings

Question 48

Taxes imposed on the employer by states that provide benefits to employees who lose their jobs.

Answer 48

State unemployment taxes

Question 49

A form showing gross earnings, FICA taxes withheld, and income taxes withheld, prepared annually by an employer for each employee.

Answer 49

Wage and Tax Statement (Form W-2)

Question 50

Amounts paid to employees based on a rate per hour or on a piecework basis.

Answer 50

Wages

Question 51

A measure of a company's liquidity; computed as current assets minus current liabilities.

Answer 51

Working capital

Question 52

Admission of a partner by investing assets in the partnership, causing both partnership net assets and total capital to increase.

Answer 52

Admission by investment

Question 53

Admission of a partner in a personal transaction between one or more existing partners and the new partner; does not change total partnership assets or total capital.

Answer 53

Admission by purchase of an interest

Question 54

A debit balance in a partner's capital account after allocation of gain or loss.

Answer 54

Capital deficiency

Question 55

Partners who have unlimited liability for the debts of the firm.

Answer 55

General partners

Question 56

The basis for dividing net income and net loss in a partnership.

Answer 56

Income ratio

Question 57

A form of business organization, usually classified as a partnership for tax purposes and usually with limited life, in which partners, who are called members, have limited liability.

Answer 57

Limited liability company

Question 58

A partnership of professionals in which partners are given limited liability and the public is protected from malpractice by insurance carried by the partnership.

Answer 58

Limited liability partnership.

Question 59

Partners whose liability for the debts of the firm is limited to their investment in the firm.

Answer 59

Limited partners

Question 60

A partnership in which one or more general partners have unlimited liability and one or more partners have limited liability for the obligations of the firm.

Answer 60

Limited partnership

Question 61

All partners have credit balances after allocation of gain or loss.

Answer 61

No capital deficiency.

Question 62

The owners' equity statement for a partnership which shows the changes in each partner's capital account and in total partnership capital during the year.

Answer 62

Partners' capital statement

Question 63

An association of two or more persons to carry on as co-owners of a business for profit.

Answer 63

Partnership

Question 64

A written contract expressing the voluntary agreement of two or more individuals in a partnership.

Answer 64

Partnership agreement

Question 65

A change in partners dur to withdrawl or admission, which does not necessarily terminate the business.

Answer 65

Partnership dissolution

Question 66

An event that ends both the legal and economic life of a partnership.

Answer 66

Partnership liquidation

Question 67

A schedule showing the distribution of cash to the partners in a partnership liquidation.

Answer 67

Schedule of cash payments

Question 68

Withdrawl of a partner in a personal transaction between partners; does not change total partnership assets or total capital.

Answer 68

Withdrawal by payment from partners' personal assets

Question 69

Withdrawal of a partner in a transaction involving the partnership, causing both partnership net assets and total capital to decrease.

Answer 69

Withdrawal by payment from partnership assets