Questions from Financial Accounting

Q: Why is depreciation expense added to net income (indirect method)

Why is depreciation expense added to net income (indirect method) on the statement of cash flows?

Q: Define long-lived assets. Why are they considered to be

Define long-lived assets. Why are they considered to be a “bundle of future services”?

Q: How is the fixed asset turnover ratio computed? Explain its meaning

How is the fixed asset turnover ratio computed? Explain its meaning.

Q: Explain why stockholders’ equity is increased by revenues and decreased by expenses

Explain why stockholders’ equity is increased by revenues and decreased by expenses.

Q: At the end of a recent year, The Gap, Inc

At the end of a recent year, The Gap, Inc., reported total assets of $7,564 million, current assets of $4,005 million, total liabilities of $3,177 million, current liabilities of $2,158 million, and s...

Q: What are the classifications of long-lived assets? Explain each

What are the classifications of long-lived assets? Explain each.

Q: Under the cost principle, what amounts should be included in the

Under the cost principle, what amounts should be included in the acquisition cost of a long-lived asset?

Q: Describe the relationship between the matching principle and accounting for long-

Describe the relationship between the matching principle and accounting for long-lived assets.

Q: Distinguish between a. Capital expenditures and revenue expenditures.

Distinguish between a. Capital expenditures and revenue expenditures. How is each accounted for? b. Ordinary repairs and improvements. How is each accounted for?

Q: Distinguish among depreciation, depletion, and amortization.

Distinguish among depreciation, depletion, and amortization.