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ACCT 1004 FUNDAMENTALS OF ACCOUNTING COMPLETED EXAM WITH RATIONALES 2024
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ACCT 1004 FUNDAMENTALS OF ACCOUNTING COMPLETED EXAM WITH RATIONALES 2024
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ACCT 1004Fundamentals of
Accounting
COMPLETED EXAM w/
RATIONALES
2024
,1. What is the main purpose of a balance sheet?
A) To show the sources and uses of cash for a business
B) To show the revenues and expenses of a business for a period
C) To show the assets, liabilities, and equity of a business at a point in
time
D) To show the profitability and efficiency of a business operations
Answer: C. A balance sheet is a snapshot of a business's financial position
at a given date. It shows what the business owns (assets), what it owes
(liabilities), and what it has invested (equity).
2. What is the accounting equation?
A) Assets = Liabilities + Equity
B) Assets = Revenues - Expenses
C) Equity = Assets - Liabilities
D) Equity = Revenues - Expenses
Answer: A. The accounting equation is the basis of the balance sheet. It
states that the total assets of a business must equal the total liabilities and
equity.
3. What is an income statement?
A) A statement that shows the changes in equity for a period
B) A statement that shows the inflows and outflows of cash for a period
C) A statement that shows the revenues and expenses for a period
D) A statement that shows the assets and liabilities for a period
Answer: C. An income statement is a summary of a business's
performance for a period. It shows how much revenue the business earned
and how much expenses it incurred.
, 4. What is the difference between revenue and income?
A) Revenue is the amount of money received from customers, while
income is the amount of money left after deducting expenses
B) Revenue is the amount of money left after deducting expenses, while
income is the amount of money received from customers
C) Revenue and income are synonymous terms that mean the same thing
D) Revenue and income are different terms that depend on the context and
industry
Answer: A. Revenue is the amount of money received from customers for
providing goods or services, while income is the amount of money left
after deducting expenses from revenue. Income is also called net income
or profit.
5. What are some examples of expenses for a nursing business?
A) Salaries, rent, utilities, supplies, insurance, depreciation, interest
B) Cash, accounts receivable, inventory, equipment, buildings, land
C) Accounts payable, notes payable, wages payable, taxes payable, loans
D) Common stock, retained earnings, dividends, capital contributions
Answer: A. Expenses are the costs incurred to generate revenue for a
business. Some common examples of expenses for a nursing business are
salaries for nurses and staff, rent for office space, utilities such as
electricity and water, supplies such as gloves and syringes, insurance to
protect against lawsuits and malpractice, depreciation to account for the
wear and tear of equipment and buildings, and interest to pay for
borrowing money.
6. What is depreciation?
A) The decrease in value of an asset over time due to use or obsolescence
B) The increase in value of an asset over time due to inflation or
appreciation
C) The allocation of the cost of an asset over its useful life as an expense
D) The recognition of the revenue earned from using an asset in
operations
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