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Chapter 7

Across
Allocating the cost of an asset to expense over the period of its useful life.
Also known as the rate of return on assets, it measures how effectively and how efficiently a company has used its assets to generate net income (profit). DuPont Analysis
Long-lived assets, such as land, buildings, and equipment, used in the operation of the business. Also called fixed assets or property and equipment.
A ratio computed by the formula Net income/Net sales. The ratio measures how much every sales dollar generates in profit.
The cost of a plant asset minus its estimated residual value.
The expected cash value of an asset at the end of its useful life
expenditure that increases an asset's capacity or extends its useful life. Capital expenditures are debited to an asset account.
An asset's estimated market value at a particular date.
Depreciation method by which a fixed amount of depreciation is assigned to each unit of output produced by the plant asset.
A depreciation method in which an equal amount of depreciation expense is assigned to each year of an asset's use.
An asset with no physical form
Net sales/Average total assets
Down
An accelerated depreciation method that computes annual depreciation by multiplying the asset's decreasing book value at the beginning of the year by a constant percentage that is two times the straight-line rate.
The length of service a business expects to get from an asset, which may be expressed in years, units of output, miles, or other measures.