Test #4 Flashcards Preview

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Flashcards in Test #4 Deck (35):
1

What are PLANT / FIXED ASSETS?

resources that...
- have physical substance (a definite size and shape)
- are used in the operations of business
- are not intended for sale to customers
- are expected to be of use to the company for a number of years

2

What is an example of PLANT / FIXED ASSETS?

- pizza oven
- pizza truck

3

What is it called if an asset is INTENDED FOR SALE?

Inventory

4

What does PP&E stand for?

Property, Plant, and Equipment

5

What is a PHYSICAL SUBSTANCE?

something you can touch, but is not for sale

6

What are 3 things needed to calculate DEPRECIATION?

1. Cost
2. Useful Life
3. Salvage Value

7

What are the two ways USEFUL LIFE can be stated in? What's their methods?

1. time (years) --> straight line method
2. units (miles or hours) --> units of activity

8

What is the formula for DEPRECIABLE COST?

depreciable cost = cost - salvage value

9

What is COST when computing depreciation?

all expenditures necessary to acquire the asset and make it ready for intended use

10

What is USEFUL LIFE when computing depreciation?

estimate of the expected life based on need for repair, service life, and vulnerability to obsolesce

11

What is SALVAGE VALUE when computing depreciation?

estimate of the asset's value at the end of its useful life

12

Where is DEPRECIATION EXPENSE reported?

income statement

13

Where is ACCUMULATED DEPRECIATION reported?

balance sheet

14

What is the formula for ANNUAL DEPRECIATION EXPENSE using the straight line method?

cost - salvage value = depreciable cost

depreciable cost / useful life (in years) = annual depreciation expense

15

What is the formula for ANNUAL DEPRECIATION EXPENSE using the units of activity method?

depreciable cost / total units of activity = depreciable cost per unit

depreciable cost per unit * units of activity during the year = annual depreciation expense

16

What does a DEPRECIATION JOURNAL ENTRY look like?

Dr. Depreciation Expense
Cr. Accumulated Depreciation
to record depreciation

17

What is ACCUMULATED DEPRECIATION classified as?

contra-asset (permanent account)

18

What is DEPRECIATION EXPENSE classified as?

expense (temporary account)

19

What is the formula needed to calculate BOOK VALUE?

cost asset - accumulated depreciation = book value

20

What will book value EQUAL in the end?

salvage value

21

What are INTANGIBLE ASSETS?

legal rights that have no physical substances

22

What are common types of INTANGIBLE ASSETS?

- patents
- copyrights
- Goodwill
- trademarks and trade names
- franchises

23

What is the formula to calculate INTEREST ON A LOAN?

Face Value * APR = Annual Interest

Annual Interest / 12 = Monthly Interest

Monthly Interest * Life of Note in a Month = Interest Over Life of a Note

24

How are WORKING CAPITAL and CURRENT RATIO measured?

liquidly

25

What is the formula for WORKING CAPITAL?

current assets - current liabilities = working capital

26

What is the formula for CURRENT RATIO?

current assets / current liabilities = current ratio

27

Can WORKING CAPITAL be a negative number?

YES

28

What is the formula for GROSS PAY?

hours worked * rate of pay = gross pay

29

What is the formula for NET PAY?

gross pay - FICA (7.65%) - income taxes withheld = net pay

30

What PAYROLL DEDUCTIONS are MANDATORY?

- FICA tax
- Federal Income Tax (FUTA)
- State Income Tax (SUTA)

31

What PAYROLL DEDUCTIONS are VOLUNTARY?

- Charity
- Insurance
- Union Dues
- Pension Plans

32

What is the percentage of FICA that gets taken out? How is it broken down?

7.65% total in deductions

6.2% in Social Security
1.46% Medicare

33

What taxes does the EMPLOYEE have to pay?

- FICA
- Income Tax

34

What taxes does the EMPLOYER have to pay?

- FICA
- SUTA
- FUTA

35

When is the FINAL?

Thursday, May 3, 2018 @ 1:30 PM