Asset Valuation and Depreciation Quiz

Long-term financial assets held for investment purposes.

Financial assets held for a short period, not considered SAV.

For SAV with temporary decreases in value, companies have the option to record either the higher or lower value on the balance sheet.

Recording a lower value on the balance sheet saves company resources.

Recording a higher value on the balance sheet attracts investors.

A system for recording all data and the process of planned and unplanned depreciation of assets. It helps track the asset's value over time.

The method used to calculate how much an asset's value decreases over time. Common methods include linear, declining balance, and sum-of-the-years' digits.

The estimated period an asset is expected to be used for its intended purpose, usually given in years. It helps determine the depreciation rate.

The calculated decrease in an asset's value over a specific period, typically a year, based on the chosen depreciation method and useful life.

Unplanned depreciation, which occurs when an asset's value decreases unexpectedly due to factors such as damage, obsolescence, or unexpected use.

The total cost incurred to acquire inventory items, including initial stock, inflows (new goods, freight), and any additional expenses.

A specific product or material held in stock for sale or use in production.

The quantity of inventory items already available at the beginning of a period.

Inventory items added to the stock during a period, including purchases and incoming shipments.

Inventory items removed from the stock during a period, including sales and transfers.

The total cost of inventory divided by the total quantity of inventory, representing the cost per unit.

A valuation method where inventory is valued at the lower of its cost or market value, ensuring a conservative accounting approach.

A way to assign a value to inventory, determining its worth for reporting and accounting purposes.

A standardized and objective estimation of the current market value of an inventory item.

The difference between the beginning inventory value and the ending inventory value, reflecting changes in stock levels and prices.

Converting a gross amount to a net amount by subtracting VAT (Value Added Tax).

The acquisition costs for land, including purchase price, surveying fees, transfer taxes, and other related expenses.

Acquisition costs for movable assets, including list price, discounts, deductions, and net purchase price.

Acquisition costs for vehicles, including purchase price, transfer fees, registration fees, and additional accessories.

Acquisition costs for machinery, including transportation, customs duties, packaging, and assembly.

Loan costs and interest are not included in acquisition costs.

Property taxes incurred after acquiring an asset are not included in acquisition costs.

An asset that loses value over time due to wear and tear, obsolescence, or usage. It can be systematically reduced in value on a company's financial statements.

An asset that does not lose value over time and is not subject to depreciation. Its value remains relatively stable.

Systematic depreciation, a planned and consistent reduction in the value of a depreciable asset over its useful life. This is done according to a predetermined method and schedule.

The amount of depreciation expense recognized on an asset's value each year. It's calculated based on the asset's cost, useful life, and chosen depreciation method.

Divide the asset's total cost (acquisition and manufacturing) by its estimated useful life.

A calculation of depreciation expense for a portion of the year when an asset was not purchased at the beginning of the year. The remaining depreciation is carried over to the next year.

Assets are recorded at their original purchase price. This is the starting point for valuation.

If an asset's value changes, it should be revalued to reflect its current market worth.

The lower of the asset's original cost or its current market value is used for recording. This ensures a conservative approach.

Revenue is recognized only when the goods or services related to it are delivered.

Report the highest value for liabilities, like payable obligations.

The difference between the recorded value and the real value of an asset is recorded.

Increases in asset values affect Profit positively.

Decreases in asset values affect Loss negatively.

Costs directly associated with producing goods, used for pricing products to cover production expenses.

Costs not directly linked to a specific product, considered 'simple costs' with no clear return like depreciation.

Method of tracking and analyzing costs associated with production and operations, used for pricing and decision-making.

Records financial transactions, summarizes financial performance, and provides a financial snapshot of a company.

Lower value boundary for goods, used in accounting to establish a minimum valuation.

Upper value boundary for goods, used in accounting to establish a maximum valuation.

AK is used for product pricing and is directly reflected in financial statements, while HK is used for management decisions and is indirectly reflected in financial statements.

Cost Accounting focuses on specific production costs while Financial Accounting tracks overall financial performance, with some overlap in cost reporting.

Ensuring the assets (what a company owns) equal the liabilities (what a company owes) plus the owner's equity (the value of the company).

The gradual decrease in the value of an asset over time, considered a cost of using the asset.