Exam 1 Material
To provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors.
What is the objective of financial reporting?
Claims held against customers and others for money, goods, or services.
What are receivables?
This PP&E account includes street lights, sewers, and drainage systems.
What are land improvements?
What is "depreciable base" or "depreciation base"?
These types of long-term assets lack physical substance.
What are intangible assets?
The left side of an account
What is debit?
This inventory method generally provides the least amount of net income in a period of rising prices.
During construction of a qualified asset, this is the amount of interest that can be capitalized.
What is the lower of avoidable or actual interest?
The method typically used to compute depletion for accounting purposes.
What is the units-of-production or activity method?
This term refers to assets minus liabilities.
What are net assets?
This type of income statement does not differentiate operating and non-operating expenses/revenues.
What is a single-step income statement?
This method of accounting for receivables assumes that the customer will take advantage of any cash discounts.
What is the net method?
The value at which PP&E is typically recorded on the balance sheet.
What is historical cost?
This method of depreciation has a depreciation rate double that of straight-line.
What is the double-declining method?
The excess of purchase price over net identifiable assets.
What is goodwill?
This financial statement is useful for analyzing liquidity, solvency, and financial flexibility.
What is the balance sheet?
The value at which inventories should be stated on the balance sheet.
What is LCNRV (or LCM)?
The term for cash received during a nonmonetary exchange.
What is boot?
This depreciation method uses a depreciation fraction.
What is the sum-of-years' digits method?
This test compares the sum of expected future cash flows with the carrying (book) value of the asset.
What is the recoverability test?