Chapter 4: Study Guide Material

Question 1

Discuss adjusting journal entries?

Answer 1

are required journal entry at the end of the period to properly reflect the transactions that may cover more than 1 period

Question 2

What is revenue recognition?

Answer 2

requires that revenues are recorded when earned

Question 3

What is Expense recognition?

Answer 3

requires expenses to be recognized in the period of revenues (also know as matching concept)

Question 4

What is cash after occurrence called?

Answer 4

• accrual

Question 5

What is cash before occurrence called?

Answer 5

-deferral

Question 6

Time period assumption points?

Answer 6

• passage of time
• cut off dates
• timing delays

Question 7

What kind of situation do deferrals refer to?

Answer 7

• a situation where cash has already been recorded and the account relates to more than on period

Question 8

What does deferred revenues equal?

Answer 8

liabilities

Question 9

what is depreciation?

Answer 9

is the systematic allocation of the cost of an operational asset over its useful life.

Question 10

Purpose of closing entries?

Answer 10

1) to transfer net income (or net loss) to retained earnings

2) to establish zero beginning balances in all revenue, expense and dividend accounts

Question 11

What does the post closing trial balance reflect?

Answer 11

only contains assets, liabilities, and stockholder equity accounts

Question 12

What kind of asset is accumulated depreciation?

Answer 12

• it is a contra-asset

Question 13

What doe deferred expense equal?

Answer 13

• it equals asset

Question 14

cost - accumulated depreciation=

Answer 14

book value