ACC 2361 EXAM 1 QUESTIONS & ANSWERS 2024/2025
Accounting Definition - ANSWERSAn information system that *identifies, records and communicates the economic events* of an organization to interested users
Basic Accounting Equation - ANSWERSAssets = Liabilities + Stockholder's Equity
*A = L ...
Accounting Definition - ANSWERSAn information system that *identifies, records and communicates the
economic events* of an organization to interested users
Asset - ANSWERSEconomic resources presently controlled by the company that have measurable value &
are expected to benefit the company by producing cash inflows or reducing cash outflows in the future
Stockholder's Equity - ANSWERSOwner's claim to business resources
EX) Common Stock (paid), Retained earnings
Net Income/Net Loss - ANSWERSRevenues - Expenses = Net Income/Loss
Revenues - ANSWERS-Sales of goods or services to customers
-They are measured at the amount the business charges the customers
, Expenses - ANSWERSThe cost of doing business necessary to earn revenues, including wages to
employees, advertisements, insurance, utilities & supplies *used* in an office
Unearned Revenue - ANSWERSGetting money before performing
EX) Receiving $50 now to wash someone's car tomorrow. It is unearned until the car is washed
Financial Statements - ANSWERS(1) Income Statement
(2) Statement of Retained Earnings
(3) The Balance Sheet
(4) Statement of Cash Flows
Income Statement - ANSWERS-Reports the amount of revenues & expenses doe a *period of time*
-This statement will reveal net income/loss
Statement of Retained Earnings - ANSWERS-Reports the way that net income and the distribution of
dividends affected the financial position of the company during the *period of time*
-Shows the beginning net earnings & the net income/loss for the month, thus showing the *retained
earnings*
Dividends - ANSWERS-Distributions of a company's earnings to its stockholders as a return on their
investment
-These are *NOT* an expense, revenue or asset
-Takes the company's retained earnings and give them to investors
The Balance Sheet - ANSWERS-Reports at a point in time, *one particular date* and shows:
(1) What a business owns (*asset*)
(2) What it owes to creditors (*liabilities*)
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