Exam (elaborations)
WGU D104 INTERMEDIATE ACCOUNTING II UNITS 4-6 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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WGU D104 INTERMEDIATE ACCOUNTING II UNITS 4-6 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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WGU D104 INTERMEDIATEACCOUNTING II UNITS 4-6 QUESTIONS
AND ANSWERS WITH SOLUTIONS 2024
Asset Turnover Ratio - ANSWER net sales/average total assets
Profit Margin Ratio - ANSWER net income/total sales
Rate of return on assets - ANSWER net income/average total assets
Current ratio - ANSWER current assets/current liabilities
acid-test ratio - ANSWER (cash + short-term investments + net receivables) / current liabilities
rate of return on common stock equity - ANSWER (net income - preferred dividends) / average common
stockholders' equity
payout ratio - ANSWER cash dividends / (net income - preferred dividends)
book value per share - ANSWER common stockholders' equity / outstanding shares
sum-of-the-years'-digits method - ANSWER Accelerated depreciation with higher depreciation cost in
beginning and lower charges in the end. Numerator is the # of years of est. life remaining at the 1st of
the year, denominator is sum of the years individually. (e.g. 5/15, 4/15, 3/15, 2/15, 1/15)
Variable charge depreciation method (activity method or units-of-activity/ production approach) -
ANSWER ((cost - salvage value) X current units) / total estimated units
activity method - ANSWER (actual activity in period / total estimate activity) X (cost - salvage value)
double declining balance method - ANSWER An accelerated depreciation method that computes annual
depreciation by multiplying the depreciable asset's decreasing book value by a constant percent that is
two times the straight-line depreciation rate.
Multiple assets group depreciation method - ANSWER Assets similar in nature and have approx. same
useful lives. Total of the annual depreciation expense for all assets in the group / total cost of the assets.
Multiple assets composite depreciation method - ANSWER Assets are dissimilar and have different lives.
Total annual depreciation expense of all assets / total cost of all assets.
Composite life - ANSWER (Original cost - salvage value) / total annual depreciation
Composite depreciation rate - ANSWER Total annual depreciation of all assets / total cost of all assets.
Journal entry for gain on sale of composite depreciation equipment - ANSWER Debit cash & accumulated
depreciation (subtract gain), credit equipment.
, Impairment - ANSWER If the carrying amount exceeds the undiscounted future cash flows. Loss =
carrying amount > fair value.
Journal entry for impairment - ANSWER Debit impairment loss, credit accumulated depreciation
When is the restoration of an impairment loss permitted? - ANSWER When an assets is held for disposal.
Impairment loss is reported at the lower of cost or net realizable value (fair value - cost to sell/dispose)
not to exceed amount of initial impairment loss.
Depletion base for natural resources - ANSWER (cost to acquire + cost to explore + cost to develop i.e.
intangible costs + cost to restore). Tangible costs to extract resources depreciated separately.
Natural resources depletion rate - ANSWER (depletion base - salvage value) / total units to be recovered.
Natural resources depletion expense - ANSWER (depletion rate X units of usage) / extracted
Journal entry to record ore extracted - ANSWER Debit inventory (ore), credit mineral mine
Journal entry to record the ore sold - ANSWER Debit cost of goods sold, credit inventory (ore)
Journal entry to record depletion expense for mine - ANSWER Debit depletion expense, credit
accumulated depletion
Types of current liabilities - ANSWER Accounts payable, notes payable, dividends payable, customer
advances/deposits, unearned (deferred) revenues, sales tax payable, current maturities of long-term
debt
Journal entry to record issuance of a note - ANSWER Debit cash, credit notes payable
Journal entry to record payment of the note at maturity - ANSWER Debit notes payable, debit interest
expense, credit cash
Journal entry to record issuance of a zero interest bearing note - ANSWER Debit cash, debit discount on
notes payable, credit notes payable
Journal entry to record payment of a zero interest bearing note at maturity - ANSWER Debit notes
payable, credit cash
Journal entry to record sale of gift certificate booklet - ANSWER Debit cash, credit unearned gift card
revenue
Journal entry to record redemption of gift cards - ANSWER debit unearned gift card revenue, credit sales
revenue
Journal entry to record a sale with sales tax and a loss on sales tax - ANSWER Debit cash, debit loss on
sales tax collection, credit sales revenue, credit sales tax payable
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