You Should Know This
Tangible assets used in the operation of a business that have a useful life of more than one accounting period.
What are plant assets?
A written promise to pay a specified amount of money at a certain date.
What is a promissory note?
Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 20 years.
What is a patent?
The insufficient capacity of a company's plant assets to meet the company's growing production demands.
What is inadequacy?
The process of allocating to expense the cost of a plant assets.
What is depreciation?
The total cost of an asset less its accumulated depreciation.
What is book value?
The quality of receivables refers to this.
What is the likelihood of collection without loss?
Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.
What is a copyright?
Used to evaluate the efficiency of management's use of assets to generate sales.
What is the total asset turnover?
Obligations due to be paid within one year or within the company's operating cycle, whichever is longer are known as this.
What are current liabilities?
The process of allocating the cost of natural resources to periods in which they are consumed.
What is depletion?
Net sales divided by average accounts receivable.
What is accounts receivable turnover?
The rights granted to the lessee by the lessor of a lease.
What is a leasehold?
The systemic allocation of the cost of an intangible asset to expense over its estimated useful life.
What is amortization?
Obligations not expected to be paid within one year (or the company's operating cycle if longer than one year) are reported as this.
What are long-term liabilities?
The person who signs a note receivable and promises to pay the principal and interest.
Who is a maker?
FICA taxes include this.
What are social security taxes?
The day the note is due to be paid is also called this.
What is the maturity date?
The accounting principle that requires financial statements to report all relevant information about the operations and financial condition of a company.
What is full disclosure?
A probable future payment of assets or services that a company is currently obligated to make as a result of past transactions or events.
What is a liability?
When the maker of a note honors a note this indicates that the note is this.
What is paid in full?
Unemployment taxes.
What are FUTA taxes?
Total compensation earned by an employee before any deductions/.
What is gross pay?
The buyer who pays cash for an account receivable is referred to as this.
What is a factor?
Payments made up of Social Security and Medicare taxes.
What are social security payments?
Failure by a promissory note's makers to pay the amount due at maturity is known as this.
What is dishonoring a note?
Refers to the likelihood of collection without loss.
What is the quality of receivables?
The withholding allowance certificate that is filed with the employer.
What is a W-4?
According to GAAP, the amount of bad debt expense can be estimated by this.
What is the percent of sales method, the percent of accounts receivable method, or the aging of accounts receivable method.
The process of allocating the cost of a plant asset to an expense account in the accounting periods benefitting from its use.
What is depreciation?
The difference between the amount received from issuing a note payable and the amount repaid is known as this.
What is interest?
Reporting that involves classifying each account receivable by how long it is past its due date and estimating the amount that is uncollectable.
What is the aging of accounts receivable?
This is an estimate of an asset's value at the end of its benefit period.
What is salvage value?
This depreciation method produces larger depreciation expense during the early years of an asset's life and smaller expense later in the year.
What is the accelerated depreciation method?
The purchase of a property that included land, building, and improvements.
What is a lump-sum purchase?
Banks authorized to accept deposits of amounts payable to the federal government.
What are federal depository banks?
The movie we watched in class on the first day.
What is "In Debt We Trust"?
This principle supports the reporting of plant assets at book value rather than market value.
What is the going-concern principle?
Method of accounting that records the loss from an uncollectable account receivable when the company determines it to be uncollectable.
What is the direct write-off method?
Resources that include standing timber, mineral deposits, oil wells, and gas fields.
What are natural resources?