Intermediate FINAL Exam: practice

Front

What is the capitalized cost of an asset?

Back

The capitalized cost of an asset includes the purchase price, shipping costs, installation costs, and any other costs necessary to prepare the asset for use, minus any discounts received.

Front

How do you calculate total assets and expenses for a new project?

Back

Total assets include the purchase price of any patents or equipment, while total expenses include all research and development costs incurred.

Front

What is the sum-of-the-years-digits method of depreciation?

Back

The sum-of-the-years-digits method is a form of accelerated depreciation that allocates a larger portion of the asset's cost to the earlier years of its useful life.

Front

How do you calculate accumulated depreciation using the sum-of-the-years-digits method?

Back

To calculate accumulated depreciation, determine the depreciable base, the sum of the years of the asset's life, and apply the fraction of years remaining to the depreciable base.

Front

What is the time value of money?

Back

The time value of money is the concept that money available today is worth more than the same amount in the future due to its potential earning capacity.

Front

What is present value (PV)?

Back

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Front

What is the formula for calculating interest expense?

Back

Interest Expense = Principal Amount x Interest Rate x Time Period.

Front

How do you determine the interest expense for a loan?

Back

Interest expense is calculated based on the principal amount of the loan, the interest rate, and the time period for which the interest is being calculated.

Front

What is a patent in accounting terms?

Back

A patent is an intangible asset that gives the holder exclusive rights to a particular invention or process for a specified period.

Front

What are the components of capitalized costs for equipment?

Back

Capitalized costs for equipment include the purchase price, shipping and handling costs, installation costs, and any other costs necessary to prepare the equipment for use.