In a given period, the firm's beginning gross investment is 4,000 and ending gross investment is 12,000. The accumulated depreciation at the beginning was 800 and the ending balance in this account was 900. The firm uses straight-line depreciation. The average age of the firm's assets at the end of the period is ________.
Answer(s): C
Note that: Average age = Accumulated depreciation/Depreciation expense. Depreciation expense = 900-800 = 100. Hence, Avg. age = 900/100 = 9 years.
Which of the following transactions will impact a company's balance sheet?
Answer(s): D
All of these answers are correct. Net income earned by a company and the sale of common stock will affect the equity of a company; the purchase of equipment for cash will affect two assets accounts (cash and long-term assets); the payment of principal of a long-term loan will affect the liabilities of a company.
When preparing a statement of cash flow, one of the relationships between balance sheet changes and cash flows can be summarized as
Increases (decreases) in assets represent net cash outflows (inflows). If an asset increases, the firm must have paid cash in exchange. On the other hand, when a liability increases, the firm must have received cash in exchange.
Which of the following is/are true about Goodwill?
Under US GAAP, Goodwill generated during acquisitions are capitalized; it does not allow capitalization of internally generated Goodwill.
Each of the following are conditions that must be met if revenue is going to be recognized at the time of sale except
Answer(s): B
Revenue can be recognized at the time of sale as long as the product returns are reasonably estimated as well as several other conditions existing. There is no definitive number of days that make the recognition possible.
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