Acct4 - Study guides, Class notes & Summaries

An expense need not be recurring in order to be “ordinary.” True False Rationale: An expense is ordinary if it is normal, usual, or customary in the type of business  conducted by the taxpayer and is not capital in nature. However, the expense need not  be recurring to be deductible as ordinary. Question 2 1 / 1 pts Under the “one­year rule” for the current period deduction of prepaid expenses of cash  basis taxpaye...

Which of the following are characteristics of a liability? 1 Are measured, recorded, and reported at their face amount. 2 The liability transaction must have already occurred. 3 The company has little or no discretion to avoid the future sacrifice of economic benefits. - ANSWER 2 and 3 On September 1, 2016, a company borrowed cash and signed a 1-year, interest-bearing note on which both the principal and interest are payable on September 1, 2017. How will the note payable and the related ...

The client began purchasing inventory from a major stockholder. - ANSWER increase The client changed insurance carriers because the rates were more favorable. - ANSWER no change Two members of the client's audit committee resigned. - ANSWER increase The client added to the staff of the internal auditors. - ANSWER decrease The client settled a major legal case involving a patent for one of its major products. - ANSWER decrease

Inventory cost flows - ANSWER beginning inventory + cost of goods purchased - ending inventory = cost of goods sold Net Realizable Value (NRV) - ANSWER estimated selling price - costs of selling What inventory costing method is affected by choice of periodic vs perpetual system? - ANSWER LIFO and weighted avg

CH4 - LO1: Understand that complete ownership is not a prerequisite for the formation of a business combination. - ANSWER n/a CH4 - LO2: Describe the valuation principles underlying the acquisition method of accounting for the noncontrolling interest. - ANSWER nj/a CH4 - LO3 Allocate goodwill acquired in a business combination across the controlling and noncontrolling interests. - ANSWER ... CH4 - LO4 Understand the computation and allocation of consolidated net income in the presence of ...

ACCT413 Exam 3 | exam review 2024 2. What is depreciation?: The cost recovery method that allocates the cost of tangible and real property over a period of time 3. What is amortization?: The cost recovery method that recovers the cost of intangible assets over a period of time 4. What is depletion?: The cost recovery method that allocates the price of natural resources as they are removed

Preferred Stock Characteristics Usually issued AT par & has more debt characteristics than equity 1. Preference to Dividends -% of par value (%*face) -cumulative preferred tock ("earned" NOT accumulated, "in arrears") - participating preferred stock (shares in C/S dividends) 2. Preference to assets in a liquidation -creditors, preferred stock, common stock

Leases Convey the use of an asset from an owner (lessor) to a user (lessee) for a specific period of time at a specific rate -MUST capitalize if longer than 12 months Lease Classification Test for LESSEES/LESSORS (is it a finance/sales lease?) 1. Lease transfers titles from lessor to lessee at the end of the lease term 2. Lease contains a bargain purchase option (BPO) 3. Lease term >= 75% of the estimated economic life of leased asset -TIME test 4. PV of lease payments >= 90% of F...

ACCT413 Exam 3 | exam review 2024