Justification for Having Both Intangible Assets and Other Assets Listed

question 28

Multiple Choice

Justification for having both intangible assets and other assets listed on a balance sheet include that

• A) intangible assets have no physical existence and other assets are deferred charges
• B) having more items listed on the balance sheet improves the users' understanding of the company
• C) the intangible assets are more important than the tangible assets
• D) the other asset classification is important because goodwill cannot be amortized, so it needs to be recorded on the balance sheet

Differentiate between the book value and market value of depreciable assets and understand the process of depreciation.

Acknowledge the concepts of accruals, deferrals, and their roles in adjusting entries.

Appreciate the importance of the principle of materiality in making accounting judgments.

Realize the significance of consistency, comparability, and reliability in financial reporting.

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Definitions:

Industry

A sector of the economy that includes businesses and organizations that produce similar goods or services.

Economic Costs

The sum of explicit and implicit costs which represent the total opportunity costs of resource utilization in the production of goods or services.

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen.

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as wages, rent, and materials.