A short Disscusion

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abirzob0112

Business Finance

Troy University

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As we get ready for the final exam, please post the following: a. one concept that you are confident about b. Explain the concept to the class, as if you are teaching us for the first time c. you must pick a concept that has not been posted about in this thread above your reply An example if this could be the matching principle: 1. one of the GAAP 2. We must match revenues earned with the expenses that helped to earn said revenues. Recognizing both in the same accounting period. 3. We use adjusting entries to match revenues with expenses in the example of prepaid liabilities I chose the Weighted Average Cost Method. Weighted average periodic is one of the three inventory methods we learned about in our textbook, along with FIFO and LIFO. When using the weighted average cost method, the calculation is done at the end of the period. To do this, we figure out the total cost of goods available for sale and divide by the number of units. It is helpful to separate the purchases from the sales. In accounting, weight is given based on the number of units. Say we sold two units last month, one was $100 and one was $500. What is the average cost? $500 + $ 100 = $600/2 = $300. How would the average change if we sold two units at $100 and one at $500? The average would be closer to $100 because there are two units pulling the average down. $500 + $ 100+ $100 = $700/3 = $233.33. We gave more weight to the $100 units because there were more of them. Reply : The concept that I am confident about is the Straight-Line Method in calculating depreciation expense/percentage. The straight-line method report the same amount of depreciation expense each year of an asset's full life It is not necessary for a company to use one method of computing depreciation for all of its fixed assets. For example, a company may use one method for depreciating equipment and another method for depreciating buildings. Computing straight-line depreciation may be simplified by converting the annual depreciation to a percentage of depreciable cost. The straight-line percentage is determined by dividing 100% by the number of years of expected useful life. An example of how to compute straight-line depreciation for an equipment expense shown below. Annual Depreciation=Cost-Residual Value=$24,000-$2,000-$4,400 Useful Life 5 Years Initial Cost............ $24.000 Less Residual Cost..$ 2,000 Depreciation Cost.. $22,000 DEPRECIATION EXPENSE-YEARLY AMOUNTS Year 1) $4.400-Straight line rate 20%
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Running head: ACCOUNTING EQUATION

Accounting Equation[Author Name(s), First M. Last, Omit Titles and Degrees]
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ACCOUNTING EQUATION

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Accounting Equation

The accounting equation is a fundamental principle of accounting and the fundament of
the balance sheet....


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