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Financial Accounting Exam Questions and Complete Solutions Graded A+
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Financial Accounting Exam Questions and Complete Solutions Graded A+
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FinancialAccounting Exam
Questions and
Complete Solutions
Graded A+
Denning [Date] [Course title]
,Accounting - Answer: System that collects and processes (analyzes, measures, and records) financial
information about an organization and reports that information to decision makers.
Accounting entity - Answer: Is the organization for with financial data are to be collected.
The four basic statements: - Answer: 1. Balance Sheet
2. Income Statement
3. Statement of Retained Earnings
4. Statement of Cash flows
Balance Sheet - Answer: Reports the amount of assets, liabilities and stockholders' equity of an
accounting entry at a point in time.
Income Statement - Answer: Reports the revenues less the expenses of the accounting period.
Statement of Retained Earnings - Answer: Reports the way that net income and the distribution of
dividends affected the financial position of the company during the accounting period.
Statement of Cash Flows - Answer: Reports inflows and outflows of cash during the accounting period
in the categories of operating, investing, and financing.
Basic Accounting Equation - Answer: Assets = Liabilities + Stockholders' Equity
Assets - Answer: Are the economic resources owned by the company. Each of these economic
resources is expected to provide future benefits to the firm.
Liabilities - Answer: Are the company's debts or obligations. Which will be paid with assets or services.
Stockholders' Equity (Owners' Equity) - Answer: Indicates the amount of financing provided by owners
of the business and earnings. Is the sum of the contribute capital + the retained earnings.
, Accounting Period - Answer: Is the time period cover by the financial statements.
Elements of the Income Statement - Answer: Revenues, Expenses and Net Income.
Revenues - Answer: Earnings from the sale of goods or services to costumers. Revenues are reported
whether or not have yet been paid for.
Expenses - Answer: Represent the dollar amount of resources the entity used to earn revenue during
the period.
Net Income ("the bottom line") - Answer: Is the excess of total revenues over total expenses.
Net Loss - Answer: If total expenses exceed total revenues.
Retained Earning Equation - Answer: Ending Retained Earnings = (Beginning of Retained Earnings + Net
Income) - Dividends
The Cash Flow Statement Equation - Answer: +/- Cash flow from Operating Activities (CFO)
+/- Cash flow from Investing Activities (CFI)
+/- Cash flow from Financing Activities (CFF)
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Change in Cash
Cash Flow from Operating Activities, and examples - Answer: CFO- Are cash flow that are directly
related to earning income. Example, collecting cash from costumers, pay salaries, pay bills, pay to
suppliers.
Cash Flow from Investing Activities, and examples - Answer: CFI- Are cash flow related to the
acquisition or sale of the company's productive assets. Example, the purchase of additional equipment.
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