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Accounting Exam 1 (Chapters 1 & 2) questions & answers.
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Accounting Exam 1 (Chapters 1 & 2) questions & answers.
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Accounting Exam 1 (Chapters 1 & 2)questions & answers.
Assets ANS - Economic resources
Liabilities ANS - Financing from Creditors
Stockholders' Equity ANS - Financing from Stockholders
Income Statement ANS - reports the accountant's primary measure of performance of a business,
revenues less expenses during the accounting period
Income Statement Equation ANS - Revenue - Expenses = Net Income
Accounting Equation (Balance Sheet) ANS - Assets = Liabilities + Stockholders' Equity
Statement of Stockholders' Equity ANS - reports the way that net income and the distribution of
dividends affected the financial position of the company during the accounting period.
Statement of Stockholders' Equity Equation ANS - Beginning retained earnings + Net Income -
Dividends = Retained Earnings
Balance Sheet ANS - Reports the financial position (economic resources and sources of financing) of an
accounting entity at any point in time (Snapshot)
Three Steps of Accuracy assurance ANS - 1) System of Controls
2) External Auditors
3) Board of Directors
, Accounting ANS - the art of recording, classifying and summarizing transactions, in terms of money, and
interpreting the results.
Flow of Accounting Info ANS - 1) People make decisions
2) Business transactions occur
3) Businesses prepare reports to show the results of their operations
Transaction ANS - is any event that both affects the financial position of the business entity and can be
reliably recorded
Elements of Cash Flows ANS - 1) Operating Activities
2) Investing Activities
3) Financing Activities
Notes to Financial Statements ANS - 1) Descriptions of the key accounting rules that apply to the
company's statements
2) Additional detail supporting reported numbers
3) Relevant financial information not disclosed on the statements
Luca Pacioli ANS - Published the first elements of double entry bookkeeping in 1494
Securities Act of 1933, Securities and Exchange Act of 1934 ANS - Established the Securities and
Exchange Commission (SEC) which has been given broad powers to determine measurement rules of
financial statements.
GAAP ANS - Generally Accepted Accounting Principles. Monitored and enforced by the FASB
FASB ANS - Financial Accounting Standards Board (FASB) is recognized as the body to formulate GAAP
External Auditors ANS - An Audit is an examination of the financial reports to ensure that they
represent what they claim and conform with GAAP
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