Plant Assets & Depreciation
This is the process of allocating the cost of a plant asset over its useful life.
What is depreciation?
Assets without physical substance that provide future economic benefits.
What are intangible assets?
The system of policies and procedures used to safeguard assets and ensure accurate records.
What is internal control?
A small amount of cash kept on hand for minor expenses.
What is petty cash?
This is the basic accounting equation.
What is Assets = Liabilities + Equity?
These are the four subdivisions of plant assets.
What are land, land improvements, buildings, and equipment?
This gives an inventor exclusive rights to an invention for a limited period.
What is a patent?
The term used when two or more people work together to bypass controls.
What is collusion?
A comparison of a company's cash records to the bank's records.
What is a bank reconciliation?
Resources owned by a business.
What are assets?
This depreciation method allocates the same amount of expense each year.
What is the straight-line method?
This protects names, logos, and symbols associated with products or businesses.
What is a trademark?
This protects a company from losses due to employee theft.
What is bonding?
A check returned by the bank because there is not enough money in the account.
What is an NSF check?
Amounts owed by a business to creditors.
What are liabilities?
This depreciation method is based on actual production or usage.
What is the units-of-activity method?
This protects original creative works such as books, music, and software.
What is a copyright?
These three factors make up the Fraud Triangle.
What are opportunity, rationalization, and financial pressure?
The asset most susceptible to theft and misuse.
What is cash?
The owner's claim on a company's assets.
What is equity?
This is the estimated value of an asset at the end of its useful life.
What is salvage value?
This intangible asset represents a company's reputation, customer loyalty, and favorable location.
What is goodwill?
Bernie Madoff became famous for operating this type of fraud.
What is a Ponzi scheme?
The delay between writing a check and the money being withdrawn from an account. Referenced in Movie: Catch Me If You Can.
What is check float?
Accounts that are closed at the end of an accounting period. Ex - Revenue and expense
What are temporary accounts?