Accounting test 3

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  1. Cost Principle
    We record assets at their cost.
  2. How are natural resources have loss through...
    depletion, not depreciation.
  3. Is land or land improvements and buildings depreciated?
    Can't depreciate land, can depreciate land improvements. and buildings.
  4. Capital Expenditure vs. Revenue Expenditure
    Capital Expenditure- Debited to asset, pay to get something operating. (training, installation, etc...)

    Revenue Expenditure- Debited to repairs/maintenance. Used to keep something operating, not initial start-up.
  5. Straight-line Depreciation equation
    Image Upload 1
  6. Double-Declining Balance Equation
    Multiply an assets declining book value by twice the straight-line depreciation value.
  7. True or false

    Intangible assets are depreciated.
    False. They are amortized
  8. Record a capital expenditure as...
    a debit on assets.
  9. Gain or loss =
    sale cost - book value
  10. _________ is used to compute depletion.

    _________ is used to compute amortization
    units of production
  11. ________ is recorded as an asset for acquiring another company.
  12. Current liabilities are paid...

    it includes...
    within 12 months

    • -accounts payable
    • -sales tax payable
    • -current portion of long-term notes payable
    • -unearned revenue
    • -short-term notes payable
  13. Is using a repair to increase useful life a capital or revenue expenditure?
    Capital expenditure
  14. How does issuing a discount affect interest?
    interest increases
  15. Equity =
    Assets - Liabilities
  16. Horizontal analysis/trend analysis-
    vertical analysis-
    Comparing trends year to year

    comparing with industry or companies in industry
Card Set
Accounting test 3
Accounting test 3
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