Prove that G(n) = 2n ? 4 for n ?4.
ACCT 2810-001 Chapter 7 Fixed Assets- long term or relatively permanent assets such as equipment, machinery, buildings, and land. (A cost that has been incurred o Exist physically o Owned and used by the company in its normal operations o Not offered for sale as part of normal operations Classifying Cost: o If purchase is long lived… the item is capitalized on the balance sheet as a fixed asset or investment o If not… the item is classified and recorded as an expense o If the asset is used in normal operations…classify and record as a fixed cost o If not... classified and recorded as an investment Revenue Expenditures- Cost that benefit only the current period o Ordinary maintenance and repairs o Benefit only the current period o Increase repairs and maintenance expense Capital Expenditures- Cost that improve the asset or extended its useful life o Asset improvements o Benefit current and future periods o Increase fixed assets Depreciation- Periodic recording of the cost fixed assets as an expense o Physical depreciation- wear and tear during use or from exposure to weather o Functional depreciation- obsolescence and changes in customer needs that cause the asset to no longer provide services for which it was intended o Initial Cost – residual value = depreciation value Depreciation Methods o Straight-line method- provides for the same amount of depreciation expense each year of the assets useful life *most used Annual depreciation= cost-residual value/useful life o Double-Declining Balance Method- Provides more depreciation in earlier years over the expected useful life of the asset. 1sndstep: Straight-line percentage 2 step: Double declining-balance rate 3 step: Depreciation expense Book Value: cost – accumulated depreciation Depletion- The process of transferring the cost of natural resources to an expense account o 1 step: Depletion Rate= Cost of Revenue / Estimated Total Units of Resources o 2 step: Depletion Expense= Depletion Rate x Quantity Extracted rd o 3 Step: Depletion Rate= Cost of Resource / Estimated Total Units of Recourse Intangible Assets- Long-lived assets that are useful in the operations of business and are not held for sale. o Patents- Exclusive rights to produce and sell goods with one or more unique features o Copyright- Exclusive right to publish and sell a literary, artistic, or musical composition o Trademark- a name, term, or symbol used to identify a business and its products o Goodwill- intangible asset of a business that is created from such favorable factors as location, product quality, reputation, and manageable skill. Fixed asset turnover- measures how efficiently a company is generating sales from its property, plant, and equipment o = Net Sales/Average Net Property, Plant, and Equipment Chapter 8 Current Liabilities- Liabilities that are to be paid out of current assets and are due within short time o Receiving goods or services prior to making payment o Receiving payment prior to delivering goods or services Long-term Liabilities- Liabilities due beyond one year Contingent Liability- Potential liabilities if certain events occur in the future o Likelihood of occurring: probable, reasonably, possible, or remote o Measurement: Estimable or not estimable Note Payable o Satisfy an account payable o Purchase merchandise or other assets Taxable Income- the income of a corporation that is subject to taxes as determined according to the tax laws Temporary Differences- differences between taxable income and income before income taxes Payroll- the amount paid to employees for the services they provide during a period Gross pay- total earnings of an employee for a payroll period, including bonuses and overtime pay Net Pay- the amount the employer must pay the employee Bond- a form of an interest-bearing note. o Bond indenture- a contract between a corporation issuing bonds and the bondholders o Market rate of interest- The effective rate of interest at the time the bonds were issued o Contract rate- the periodic interest to be paid on the bonds that is identified in the bond indenture o The price the buyers are willing to pay for the bonds depends on: The face amount of the bonds due at maturity date The periodic interest to be paid on the bonds The market rate of interest Common stock- When only one stock is issued Par- shares of stock that have a monetary amount Outstanding stock- the stock remaining in the hands of stockholders Majors right that accompany ownership of a share of stock: o Right to vote in matters concerning corporation o Right to share in distributions of earnings o Right to share in assets upon liquidation Price at which stock is sold depends on a variety of factors: o Financial condition, earnings record, and dividend record of the corporation o Investor expectations of the corporations potential earning power o General business and economic conditions and prospects Premium- the excess of the issue price of a stock over its par value Treasury stock- a stock that a corporation has issued and then reacquired o Provide shares for resale to employees o Reissue as bonuses to employees o Support the market price of the stock Cash Dividend- cash distribution of earnings by a corporation to its shareholders o Sufficient retained earnings o Sufficient cash o Formal action by the board of directors Stock Dividend- a distribution of shares of stock to stockholders o does not change the the assets, liabilities, or total stockholder’s equity of a corporation Stock Split- a process by which a corporation reduces the par or stated value of its common stock and issues a proportionate number of additional shares. Earnings per share= Net income-preferred dividends/number of common shares outstanding Ratio of liabilities to total assets= Total liabilities/total assets