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Unformatted text preview: 12) Definition of depreciation & how to calculate straight line: Depreciation is the process of
allocating the cost of a plant asset to expense in the accounting periods benefiting from its
use.cost-salvation value/usefil life in periods
13) Definition of depletion: The process of allocating the cost of a long-term tangible asset over its
14)What is obsolescence? Notable reduction in the utility of an inventory item or fixed asset.
15)Know the basics of a patent & the basics of intangible assets:-owner has exclusive right to
manufacture and sell a patented item or use a process for 20 years. Intangible Assets:
Nonphysical assets used in operations. Often provide exclusive rights or competitive advantages
Can have limited or indefinite life. Recorded at cost when purchased.
16)Know about the sale of an asset :Update depreciation to the date of disposal. Journalize
Recording cash received (debit) or paid (credit). Recording a gain (credit) or loss(debit). Removin
accumulated depreciation (debit). Removing the asset cost(credit).
how to determine gain or loss on sale: If Cash > BV, record a gain (credit). If Cash < BV, record
a loss (debit). If Cash = BV, no gain or loss.
17)What does the payroll register include? gross pay, deductions, tax withholding, net pay
18)When is the W-2 required to be given to employees?annualy
19) Corporations are subject to income taxes; do they need to estimate for financial statements
Yes on payable
20)Requirement of sinking fund bonds. The issuer requires a specified portion of an issue each
21) Bond legal contract is called? mortgage
22)Know basics of serial bonds. Financial bonds that mature in installments over a period of
23)What is the carrying value of bonds at maturity? Carrying Value > Retirement Price = Gain
Carrying Value < Retirement Price = Loss
24) Corporation startup costs are called?
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