11 terms

Fixed assets accounting test

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Fixed assets
long term or relatively permanent tangible assets. They are used by the business or company and are not sold to customers.
The adjusting entry used to record depreciation...
debit to depreciation expense and credit to accumulated depreciation.
Depreciation
When a fixed asset gets transferred to an expense account after it loses its value.
Physical depreciation
occurs from wear and tear while in use.
Functional depreciation
when a fixed asset can no longer provide the service that it is intended to do.
Three factors in determining the amount of depreciation expense to be recognized each period.
-the fixed asset's initial cost.
-it's expected useful life
-it's estimated value at the end of its useful life.
Residual value
the estimated value at the end of a fixed asset's useful life.
Straight line method
(original cost-residual value) / estimated life in years`
Capitol expenditures
The cost of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed assets useful life.
Betterment
An expenditure that improves a fixed asset's operating efficiency for the remainder of its useful life.
Extraordinary repair
An expenditure that increases the useful life of an asset beyond its original estimate.