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Financial Accounting 7th ed Chapter 09 Glossary
for UoP XACC 291
27
Accounting
Undergraduate 1
02/03/2014

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Term
accelerated-depreciation method
Definition
depreciation method that produces higher depreciation expense in the early years than in the later years. (p. 407)
Term
additions and improvements
Definition
costs incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset. (p. 409)
Term
amortization
Definition
the allocation of the cost of an intangible asset to expense over its useful life in a systematic and rational manner. (p. 414)
Term
asset turnover ratio
Definition
a measure of how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets. (p. 419)
Term
capital expenditures
Definition
expenditures that increase the company's investment in productive facilities. (p. 409)
Term
copyright
Definition
exclusive grant from the federal government that allows the owner to reproduce and sell an artistic or published work. )p. 415)
Term
declining-balance method
Definition
depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the useful life of the asset. (p. 406)
Term
depletion
Definition
the allocation of the cost of a natural resource to expense in a rational and systematic manner over the resource's useful life (p. 413)
Term
depreciation
Definition
the process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner. (p. 402)
Term
depreciable cost
Definition
the cost of a plant asset less its salvage value. (p. 404)
Term
franchise (license)
Definition
a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, provide specific services, or use certain trademarks or trade names, usually within a designated geographical area. (p. 416)
Term
going-concern assumption
Definition
states that the company will continue in operation for the foreseeable future. (p. 403)
Term
goodwill
Definition
the value of all favorable attributes that relate to a business enterprise. (p. 417)
Term
intangible assets
Definition
rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance. (p. 414)
Term
licenses
Definition
operating rights to use public property, granted to a business enterprise by a governmental agency. (p. 416)
Term
materiality principle
Definition
if an item would not make a difference in decision making, a company does not have to follow GAAP IN REPORTING IT. (P. 410)
Term
natural resources
Definition
assets that consist of standing timber and underground deposits of oil, gas, or minerals. (p. 413)
Term
ordinary repairs
Definition
expenditures to maintain the operating efficiency and productive life of the unit. (p. 409)
Term
patent
Definition
an exclusive right issues by the U.s. Patent Office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant. (p. 415)
Term
plant assets
Definition
tangible resources that are used in the operations of the business and are not intended for sale to customers (p. 398)
Term
research and development (R&D) costs
Definition
expenditures that may lead to patents, copyrights, new processes, or new products. (p. 417)
Term
revenue expenditures
Definition
expenditures that are immediately charge against revenues as an expense. (p. 409)
Term
salvage value
Definition
an estimate of an asset's value at the end of its useful life. (p. 403)
Term
straight-line method
Definition
depreciation method in which periodic depreciation is the same for each year of the asset's useful life. (p. 404)
Term
trademark (trade name)
Definition
a word, phrase, jingle, or symbol that identifies a particular enterprise or product . (p. 416)
Term
units-of-activity method
Definition
depreciation method in which useful life is expressed in terms of the total units of production or use expected from an asset. (p. 405)
Term
useful life
Definition
an estimate of the expected productive life, also called service life, of an asset. (p. 403)
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