MBA 601 Final Exam Questions and All
Correct Answers Graded A+ 2025-2026
Updated.
long-term operational assets - Answer assets used by a business, normally over multiple
accounting periods, to generate revenue
Tangible Asset - Answer assets that you can physically touch (PPE, natural resources)
Intangible Asset - Answer nonphysical asset, such as a patent or trademark, that has economic
value in the form of expected benefit
Basket Purchase - Answer purchase of more than one asset at the same time for one purchase
price
Deferral - Answer paying the cash before recognizing the expense
Depreciation Expense Formula - Answer (asset cost - salvage value) / useful life
Straight-Line Depreciation - Answer Method that allocates an equal portion of the depreciable
cost of plant asset (cost minus salvage) to each accounting period in its useful life.
Contra-Asset Account - Answer an account that is offset against an asset account on the
balance sheet
Book Value - Answer the difference between the cost of a depreciable asset and its related
accumulated depreciation
Depreciation - Answer the process of allocating a cost overtime
Matching Concept - Answer the practice of pairing revenues with expenses on the income
statement
, Double-Declining Balance Depreciation - Answer produces a large amount of depreciation in
the first year of an asset's life and progressively smaller levels of expense in each succeeding
year
Double-Declining Depreciation Formula - Answer Beginning Year Book Value * (2(Straight Line
Rate))
Current Assets - Answer an asset that is used or converted to cash within one year, or one
operating cycle, whichever is longer
Current Liabilities - Answer obligations due within one year, or one operating cycle, whichever
is longer
Classified Balance Sheet - Answer used to compare current assets and current liabilities to see
if a company can cover its short-term obligations
Operating Cycle - Answer The period of time between the purchase of inventory and the
collection of any receivable from the sale of the inventory.
Liquidity - Answer the ability to generate enough cash to meet current obligations
Current Ratio Formula - Answer Current Assets / Current Liabilities
What is the Current Ratio used to assess? - Answer Liquidity
Solvency - Answer the ability to meet obligations in the long-run
Debt-to-Asset Ratio Formula - Answer Total Liabilities / Total Assets
What does the debt-to-asset ratio assess? - Answer Solvency
Bond Certificate - Answer A legal document that indicates the name of the issuer, the face
value of the bonds, and other data such as the contractual interest rate and the maturity date of
the bonds.
Correct Answers Graded A+ 2025-2026
Updated.
long-term operational assets - Answer assets used by a business, normally over multiple
accounting periods, to generate revenue
Tangible Asset - Answer assets that you can physically touch (PPE, natural resources)
Intangible Asset - Answer nonphysical asset, such as a patent or trademark, that has economic
value in the form of expected benefit
Basket Purchase - Answer purchase of more than one asset at the same time for one purchase
price
Deferral - Answer paying the cash before recognizing the expense
Depreciation Expense Formula - Answer (asset cost - salvage value) / useful life
Straight-Line Depreciation - Answer Method that allocates an equal portion of the depreciable
cost of plant asset (cost minus salvage) to each accounting period in its useful life.
Contra-Asset Account - Answer an account that is offset against an asset account on the
balance sheet
Book Value - Answer the difference between the cost of a depreciable asset and its related
accumulated depreciation
Depreciation - Answer the process of allocating a cost overtime
Matching Concept - Answer the practice of pairing revenues with expenses on the income
statement
, Double-Declining Balance Depreciation - Answer produces a large amount of depreciation in
the first year of an asset's life and progressively smaller levels of expense in each succeeding
year
Double-Declining Depreciation Formula - Answer Beginning Year Book Value * (2(Straight Line
Rate))
Current Assets - Answer an asset that is used or converted to cash within one year, or one
operating cycle, whichever is longer
Current Liabilities - Answer obligations due within one year, or one operating cycle, whichever
is longer
Classified Balance Sheet - Answer used to compare current assets and current liabilities to see
if a company can cover its short-term obligations
Operating Cycle - Answer The period of time between the purchase of inventory and the
collection of any receivable from the sale of the inventory.
Liquidity - Answer the ability to generate enough cash to meet current obligations
Current Ratio Formula - Answer Current Assets / Current Liabilities
What is the Current Ratio used to assess? - Answer Liquidity
Solvency - Answer the ability to meet obligations in the long-run
Debt-to-Asset Ratio Formula - Answer Total Liabilities / Total Assets
What does the debt-to-asset ratio assess? - Answer Solvency
Bond Certificate - Answer A legal document that indicates the name of the issuer, the face
value of the bonds, and other data such as the contractual interest rate and the maturity date of
the bonds.
