BUS 201: CHAPTER 3 & 4 QUESTIONS WITH ACCURATE
ANSWERS
An adjusting entry affects which financials? correct answer The balance sheet and
income statements
An adjusting entry... correct answer affects a Balance Sheet and an Income
Statement
Calculate book value? correct answer The difference between the cost of any
depreciable asset and its related accumulated depreciation
Calculate current assets? correct answer Assets that a company expects to
convert to cash or use up within one year or its operating cycle, whichever is
longer.
Calculate income using accrual basis. correct answer Net income is calculated by
subtracting the value of a time period's expenses incurred from the value of its
revenues earned.
Calculate income using cash basis. correct answer Net income is calculated by
subtracting a time period's cash spent from its cash received.
Calculate the Net Income/Loss. correct answer Revenue - Expenses
Goodwill, Patents, and Copyrights are examples of what type of assets? correct
answer Intangible Assets
, How often do publicly traded companies and LLC's usually pay taxes? correct
answer Quarterly
Know how to calculate interest expense. correct answer Principle x (Interest
Rate / 12 Months) = Interest Expense
Know how to calculate Straight Line Depreciation. correct answer Asset cost -
Salvage Value / Useful Life
Know how to close a revenue account. correct answer Preparing a closing entry
that debits the balance of the revenue account and credits the same amount to
the Income Summary account
Know the difference between deferrals and accruals and when to implement
them. correct answer 1. You must use adjusting entries for deferrals when
recorded unearned revenues or recorded costs must be allocated between two or
more accounting periods.
2. You must use adjusting entries for accruals when unrecorded revenues or
expenses exist.
Know the expense recognition principle. correct answer Requires that companies
recognize expenses in the period in which they make efforts (consume assets or
incur liabilities) to generate revenue.
Know the most common account period. correct answer Monthly
Know the order of columns on the worksheet: Fifth Column correct answer
Balance Sheet
ANSWERS
An adjusting entry affects which financials? correct answer The balance sheet and
income statements
An adjusting entry... correct answer affects a Balance Sheet and an Income
Statement
Calculate book value? correct answer The difference between the cost of any
depreciable asset and its related accumulated depreciation
Calculate current assets? correct answer Assets that a company expects to
convert to cash or use up within one year or its operating cycle, whichever is
longer.
Calculate income using accrual basis. correct answer Net income is calculated by
subtracting the value of a time period's expenses incurred from the value of its
revenues earned.
Calculate income using cash basis. correct answer Net income is calculated by
subtracting a time period's cash spent from its cash received.
Calculate the Net Income/Loss. correct answer Revenue - Expenses
Goodwill, Patents, and Copyrights are examples of what type of assets? correct
answer Intangible Assets
, How often do publicly traded companies and LLC's usually pay taxes? correct
answer Quarterly
Know how to calculate interest expense. correct answer Principle x (Interest
Rate / 12 Months) = Interest Expense
Know how to calculate Straight Line Depreciation. correct answer Asset cost -
Salvage Value / Useful Life
Know how to close a revenue account. correct answer Preparing a closing entry
that debits the balance of the revenue account and credits the same amount to
the Income Summary account
Know the difference between deferrals and accruals and when to implement
them. correct answer 1. You must use adjusting entries for deferrals when
recorded unearned revenues or recorded costs must be allocated between two or
more accounting periods.
2. You must use adjusting entries for accruals when unrecorded revenues or
expenses exist.
Know the expense recognition principle. correct answer Requires that companies
recognize expenses in the period in which they make efforts (consume assets or
incur liabilities) to generate revenue.
Know the most common account period. correct answer Monthly
Know the order of columns on the worksheet: Fifth Column correct answer
Balance Sheet
