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2011-03-27 23:48:34
Accounting Exam

Accounting Exam IV
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  1. Inventory
    is tangible property held for sale in the normal course of business or used in producing goods or services for sale.
  2. Merchandise Inventory
    includes goods held for resale in the ordinary course of business.
  3. Raw Materials Inventory
    includes items qcquired for the purpose of processing into finished goods.
  4. Work in Process Inventory
    includes goods in the process of being manufactured.
  5. Finished Goods Inventory
    includes manufactured goods that are complete and ready for sale.
  6. Direct Labor
    refers to the earnings of employees who work directly on the products being manufactured.
  7. Factory Overhead
    are manufacturing costs that are not raw material or direct labor costs.
  8. Goods Available for Sale
    refers to the sum of beginning inventory and purchases (or transfers to finished goods) for the period.
  9. Cost of Goods Sold Equation
    BI + P - EI = CGS
  10. Specific Identification Method
    identifies the cost of the specific item that was sold.
  11. First-In, First-Out (FIFO) Method
    assumes that the first goods purchased (the first in) are the first goods sold (the first out).
  12. Last-In, First-Out (LIFO) Method
    assumes that the most recently purchased units (the last in) are sold first (the first out).
  13. Average Cost Method
    uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.
  14. Replacement Cost
    is the current purchase price for identical goods.
  15. Net Realizable Value
    is the expected sales price less selling costs (e.g., repair and disposal costs).
  16. Lower of Cost or Market
    (LCM) is valuation method departing from the cost principle; it serves to recognize a loss when replacement cost or net realizable value drops below cost.
  17. Inventory Turnover
    Cost of Goods Sold / Average Inventory

    365 / Inventory Turnover = Average Days to Sell Inventory
  18. Long-Lived Assets
    are tangible and intangible resources owned by a business and used in its operations over serveral years.
  19. Tangible Assets
    (or fixed assets) have physical substance.
  20. Intagible Assets
    have special rights but not physical substance.
  21. Acquisition Cost
    is the net cash equivalent amount paid or to be paid for the assets.
  22. Capitalized Interest
    refers to interest expenditures included in the cost of a self-constructed asset.
  23. Ordinary Repairs and Maintenance
    are expenditures for normal operating upkeep of long-lived assets.
  24. Revenue Expenditures
    maintain the productive capacity of the asset during the current accounting period only and are recorded as expenses.
  25. Additions and Improvements
    are infrequent expenditures that increase an asset's economic usefulness in the future.
  26. Capital Expenditures
    Increase the productive life, operating effciency, or capacity of the asset and are recorded as increases in asset acounts, not as expenses.
  27. Depreciation
    is the process of allocating the cost of buildings and equipment over their productive lives using a systematic and rational method.
  28. Net Book (or Carrying) Value
    is the acquistion cost of an asset less accumulated depreciation.
  29. Estimated Useful Life
    is the expected service life of an asset to the present owner.
  30. Residual (or Salvage) Value
    is the estimated amount to be recovered by the company at the end of the asset's estimated useful life.
  31. Natural Resources
    are asets that occur in nature, such as mineral deposits, timber tracts, oil, and gas.
  32. Depletion
    is the systematic and rational allocation of the cost of a natural resource over the period of its explotation.
  33. Amortization
    is the systematic and rational allocation of the acquisition cost of an intangible asset over its useful life.
  34. Goodwill (Cost in excess of net assets acquired)
    is the excess of the purchase price of a business over the fair value of the business's assets and liabilities.
  35. Trademark
    is an exclusive legal right to use a special name, image, or slogan.
  36. Copyright
    is the exclusive right to publish, use, and sell a literary, musical, or artistic work.
  37. Technology
    includes costs for computer software and Web development.
  38. Patent
    is granted by the federal government for an invention; it is an exclusive right given to the owner to use, manufacture, and sell the subject of the patent.
  39. Franchise
    is a contractual right to sell certain products or services, use certain trademarks, or perform activities in a geographical region.
  40. Fixed Asset Turnover
    Net Sales (or Operating Revenues) / Average Net Fixed Assets.