WGU D104 Intermediate Accounting II Units 4-6 Exam Graded A+
Question : Asset Turnover Ratio
CORRECT ANSWER : net sales/average total assets
Question : Profit Margin Ratio
CORRECT ANSWER : net income/total sales
Question : Rate of return on assets
CORRECT ANSWER : net income/average total assets
Question : Current ratio
CORRECT ANSWER : current assets/current liabilities
Question : acid-test ratio
CORRECT ANSWER : (cash + short-term investments + net
receivables) / current liabilities
Question : rate of return on common stock equity
CORRECT ANSWER : (net income - preferred dividends) /
average common stockholders' equity
Question : payout ratio
CORRECT ANSWER: cash dividends / (net income -
preferred dividends)
Question : book value per share
CORRECT ANSWER : common stockholders' equity /
outstanding shares
Question : sum-of-the-years'-digits method
CORRECT ANSWER : Accelerated depreciation with higher
depreciation cost in beginning and lower charges in the end.Numerator is the # of years of est. life remaining at the 1st of the year, denominator is sum of the years individually. (e.g.
5/15, 4/15, 3/15, 2/15, 1/15)
Question : Variable charge depreciation method (activity
method or units-of-activity/ production approach)
CORRECT ANSWER : ((cost - salvage value) X current
units) / total estimated units
Question : activity method
CORRECT ANSWER : (actual activity in period / total
estimate activity) X (cost - salvage value)
Question : double declining balance method
CORRECT ANSWER : An accelerated depreciation method
that computes annual depreciation by multiplying the depreciable asset's decreasing book value by a constant percent that is two times the straight-line depreciation rate.
Question : Multiple assets group depreciation method
CORRECT ANSWER : Assets similar in nature and have
approx. same useful lives. Total of the annual depreciation expense for all assets in the group / total cost of the assets.
Question : Multiple assets composite depreciation method
CORRECT ANSWER : Assets are dissimilar and have
different lives. Total annual depreciation expense of all assets / total cost of all assets.
Question : Composite life
CORRECT ANSWER : (Original cost - salvage value) / total
annual depreciation
Question : Composite depreciation rate
CORRECT ANSWER : Total annual depreciation of all
assets / total cost of all assets.
Question : Journal entry for gain on sale of composite
depreciation equipment
CORRECT ANSWER : Debit cash & accumulated
depreciation (subtract gain), credit equipment.