ACCT 2102 - Conceptual Questions (Test
1) [Farmer] | Latest Version | 2024/2025 |
Graded A+
Define the accounting equation.
Assets = Liabilities + Equity.
What is the role of generally accepted accounting principles (GAAP)?
GAAP provides a framework for consistent financial reporting.
...
ACCT 2102 - Conceptual Questions (Test
1) [Farmer] | Latest Version | 2024/2025 |
Graded A+
Define the accounting equation.
✔✔Assets = Liabilities + Equity.
What is the role of generally accepted accounting principles (GAAP)?
✔✔GAAP provides a framework for consistent financial reporting.
What is the difference between cash basis and accrual basis accounting?
✔✔Cash basis recognizes revenue and expenses when cash is exchanged, while accrual basis
recognizes them when they are earned or incurred.
What does the term "liquidity" refer to in accounting?
✔✔Liquidity refers to a company's ability to meet its short-term obligations.
Explain what a journal entry is.
✔✔A journal entry is a record of a financial transaction in the accounting system.
1
,What is the purpose of a trial balance?
✔✔A trial balance is used to ensure that debits equal credits in the accounting records.
What are current assets? Give examples.
✔✔Current assets are assets expected to be converted to cash or used within one year, such as
cash, accounts receivable, and inventory.
Define "depreciation."
✔✔Depreciation is the systematic allocation of the cost of a tangible asset over its useful life.
What is the function of the income statement?
✔✔The income statement summarizes a company's revenues and expenses to show its
profitability over a specific period.
What are intangible assets? Provide examples.
✔✔Intangible assets are non-physical assets, such as patents, trademarks, and goodwill.
2
, What is the purpose of the statement of cash flows?
✔✔The statement of cash flows provides information about a company's cash inflows and
outflows during a specific period.
Explain the difference between fixed costs and variable costs.
✔✔Fixed costs do not change with the level of production, while variable costs fluctuate with
production volume.
What is working capital, and how is it calculated?
✔✔Working capital is the difference between current assets and current liabilities, indicating a
company's short-term financial health.
What does "revenue recognition" mean?
✔✔Revenue recognition is the accounting principle that dictates when revenue is recognized in
the financial statements.
What is a contra asset account?
✔✔A contra asset account is used to reduce the value of a related asset account, such as
accumulated depreciation reducing the value of equipment.
3
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller SterlingScores. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.66. You're not tied to anything after your purchase.
