accounting exam 3

fixed asset

fixed asset

used for use over one or more years

tangible asset

type of fixed asset physical substance; property, plant, equipment

intangible asset

type of fixed asset, special rights but no physical substance; existence is indicated only by legal documents

when to capatilize

extraordinary maintence that extends useful life of plant assets

when to expense

ordinary repairs and ordinary, ongoing expenditures

expense defintion

debit to account in period incurred

capitalizing

add to asset account and depreciate

fixed asset ratio

net revenue/average net fixed assets

fixed asset definition

cent of dollar sales a company generates for each dollar invested in assets, larger the betterA measure of how effectively a company utilizes its fixed assets to generate sales.

current portion of long term debt

classified as a current liability, on balance sheet

times interest earned ratio

net income+int exp+tax exp/interest expense

times interest earned ratio definition

measures a company's ability to meet its debt obligations by comparing its earnings to interest expenses.

debts to assets ratio

liabilities/assets

debts to assets ratio definiton

indicates the proportion of a company's assets that are financed by debt, helping assess financial leverage. It is calculated by dividing total liabilities by total assets.

stockholder benefits

voting rights, dividends, residual claims, preemptive rights

authorized stock

the amount of stock a company is authroized to selli

ssued stock

number of shares sold

outstanding stock

stock that’s still in the hands of shareholders

treasury stock

stock was repurchased by the company

operating actvities

expenses or revenues that impact net income

investing actvities

sale of investments, fixed assets, lendin gmoney, and collecting paymentsfi

financing

SHE transactions, issuing bonds payables, repaying bonds payables, repaying long term debt