Financial Accounting Test 1

• long term assets such as equipment, machinery, buildings,
• and land.

1. Tangible, physical assets

2.Used in normal operations

3. Not offered for sale in normal operations

a contract for the use of an asset for a period of time

• Accounted as if lessee has purchased asset. Debits an asset account for fair market value and credits
• long-term liability account

• if lessee is renting the asset.
• Debit Rent expense and credit Cash.

periodic recording of cost of fixed assets as an expense

• Debit Depreciation Expense and Credit Accumulated
• Depreciation
• -Include all assets’ initial costs/over useful life/estimate residual
• value

=Cost- Residual Value/Useful Life

• Depreciation per unit=
• cost-residual value/ total units of production

Step 1: Straight line percentage x 2

• Amortization: decline in the usefulness of the intangible
• assets

• Debit
• Amortization Expense and Credit the Intangible Asset

• = Revenue/ avg.
• book value of fixed assets

are debt due beyond one year-paid back in installments

Note payable with interest on the amount of time.

• Credit
• Notes Payable and Interest Expense Debit Cash

Pay including overtime pay before deductions

amount after deductions paid to the employee

contributions to social security and medicare

SUTA Tax

FUTA Tax

• SS Tax
• Medicare Tax

• Social Security Tax
• Medicare Tax
• Federal Witholding Tax

= quick assets/ current liabilities

• amounts to be invested, limits on withdrawals distributions, admission and
• withdrawal
• No legal liability
• Not Taxable

• Unlimited Life
• Not taxable