Match Each Term with the Appropriate Explanation

question 77

Multiple Choice

Match each term with the appropriate explanation.Not all explanations will be used.
-Capitalization of cost

• A)Assets that will be used for more than a year.
• B)When a company writes down the value of an asset when estimated future cash flows fall below the original level estimated.
• C)The numerator of the fixed asset turnover ratio.
• D)The cost of financing an asset.
• E)When costs are recorded as assets rather than expenses.
• F)How expenses are reported in the income statement.
• G)The denominator of the fixed asset turnover ratio.
• H)The average proportion of a company's total assets that is long-lived.
• I)A depreciation method that produces higher amounts of depreciation expense in the early years of an asset's life and lower amounts in the later years.
• J)When a company writes down the value of an asset because estimated future cash flows fall below the book value.
• K)Assets that have physical substance.
• L)A depreciation method that spreads asset cost by use rather than time.
• M)The process of transferring the cost of long-lived tangible assets to expenses.
• N)Also known as book value.

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Definitions:

Variable Cost

A cost that varies with the level of output or production activity, increasing as production increases and decreasing as production decreases.

Carrying Cost

The total cost of holding inventory, including storage, insurance, taxes, and opportunity costs.

Terms Of Sale

Conditions agreed upon by the buyer and seller covering payment, delivery, and warranties, which define the responsibilities of each party in a transaction.

Inventory

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.