Asset Management and Capitalization Principles Quiz

Tangible assets have physical substance, like buildings.

Asset management aims to enhance shareholder value.

Intangible assets lack physical presence, like Goodwill.

The balance sheet provides details on assets, liabilities, and equity.

Current assets include accounts receivable, cash, etc.

Matching principle aligns expense recognition with revenue.

Patents are intangible assets, not fixed (tangible) assets.

Matching principle dictates concurrent recognition of costs and revenue.

Capital assets contribute to the production of goods or services.

Conservatism is an accounting constraint, not a capitalization principle.

Matching principle aligns revenue and expense recognition.

ROA measures profitability relative to average total assets.

Asset turnover ratio gauges asset efficiency in revenue generation.

Capital assets are not used in day-to-day operations.

Book value equals original cost minus accumulated depreciation.

Capitalizing costs allocates their value over asset lifetimes.

Straight-line depreciation expense formula.

Capitalizing aligns costs with revenues over long-term assets.

Capitalization records an expenditure as an asset.

Capitalizing development costs allocates them over the asset's useful life.

Routine repair is a revenue expenditure, not a capital expense.

Straight-line depreciation evenly allocates costs over an asset's life.

Capitalizing interest adds it to the cost of acquiring/producing assets.

Capitalizing interest allocates it over an asset's useful life.

Double-declining balance front-loads depreciation in early years.