1. Valuing assets at historical cost – From independent observability, show me that piece of paper, for checking ownership

Asset was acquired at arms length

Using historical cost minus depreciation values often make asset values meaningless

Creditor – A person or business to whom a liability is owed
liquidity – how quickly assets are expected to be converted to cash during normal operations
Misleading cost numbers are MOST likely the result of misallocating:
a. direct material costs
b. direct manufacturing labor costs
c. indirect costs
d. All of these answers are correct. – c. indirect costs
Direction of Transactions – Debit (dr) is on the LEFT side of an account.
Credit (cr) is on the RIGHT side of an account.
libro inventarios y balances – inventory book
Disposal of an Asset before its fully Depreciated: – This results in a loss, which decreases both total assets and equity
*Journal Entry: Debit Accumulated depreciation of the equip, debit loss on disposal of equip and credit the equip
Lease – Advantage:
– reduce intial outlay to acquire assets
-easier to obtain technologically advanced assets
– reduce maintenance and repair cost
– alloes assets to be updated when they become out-dated or technologically


– no ownership if assets
– requires business commitment for the term of the lease

The doctrine of _____ holds that an individual must pay taxes on benefits with monetary value when he/she receives them.
Cash Dividend Coverage Ratio – (Cash Flow Provided By Op. Act.)/(Cash Dividends Paid)
*Company's ability to pay cash dividends
What are business processes? – Acquisition/Payment, Conversion, Sales/Collections
Net working capital – Current assets – Current liablities
depreciation – spadek wartoĊ›ci
d – In determining cost of goods sold:
(a) purchase discounts are deducted from net purchases.
(b) freight-out is added to net purchases.
(c) purchase returns and allowances are deducted from net purchases.
(d) freight-in is added to net purchases.
breakdown of the costs – Aufschlüsselung der Kosten
Net Profit Margin – Net Income/Net Sales
The dоctrine оf _____ hоlds thаt аn individuаl must pay taxes on benefits with monetary value when he/she receives them.
Z company's accountant forgot to make an adjustment at the end of the year to record depreciation expense on the equipment. What effect did this omission have on the company's financial statements – Overstated assets and shareholder's equity
intangible assets – Assets that do not have physical substance.
Cost-volume-profit analysis assumes all of the following EXCEPT:
a. all costs are variable or fixed
b. units manufactured equal units sold
c. total variable costs remain the same over the relevant range
d. total fixed costs remain the same over the relevant range – c. total variable costs remain the same over the relevant range
mature company – positive cash flow from operating activities, slightly negative cash flow from investing activities, and negative cash flow from financing activities
unqualified audit opinion – an auditors statement that the financial statements are fair presentations in all material respects in conformity with GAAP

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