Exam (elaborations)

Financial Accounting Exam Questions with 100% Correct Answers

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Course
Financial Accounting

Institution
Financial Accounting

Accounting - Answer-the information system that measures business activities, processes that information into reports and financial statements and communicates the results to decisions makers Accounting Equation - Answer-Assets = Liabilities + Owner's Equity Asset - Answer-an economic resourc...

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Uploaded on August 17, 2024
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financial accounting exam questions with 100 corr
accounting answer the information system that me

Institution Financial Accounting
Course Financial Accounting

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Financial Accounting Exam Questions
with 100% Correct Answers
Accounting - Answer-the information system that measures business activities,
processes that information into reports and financial statements and communicates the
results to decisions makers

Accounting Equation - Answer-Assets = Liabilities + Owner's Equity

Asset - Answer-an economic resource that is expected to be of benefit in the future

Balance Sheet - Answer-List of an entity's assets liabilities and owners equity as of a
specific date. also called the statement of financial position

Board of directors - Answer-Group selected by the stockholders to set policy for a
corporation and to appoint its officers

capital - Answer-Another name for the owners equity of a business

Common Stock - Answer-The most basic form of capital stock

Continuity assumption - Answer-the entity will continue to operate long enough to use
existing assets (land buildings equipment and supplies)

Corporation - Answer-a business owned by stockholders. A corporation is a legal entity,
an artificial person in the eyes of the law

Current Assets - Answer-An asset that is expected to be converted to cash, sold, or
consumed during the next 12 months, or within the business's normal operating cycle if
longer than a year

Current Liability - Answer-A debt due to be paid within one year or within the entity's
operating cycle if the cycle is longer than a year

Deficit - Answer-Negative balance in retained earnings caused by a net loss over a
period of years

Dividends - Answer-Distributions (usually cash) by a corporation to its stockholders

Entity - Answer-An organization or a section of an organization that, for accounting
purposes, stand apart from other organizations and individual as a separate economic
unit

,Ethics - Answer-Standards of right and wrong that transcend economic and legal
boundaries. Ethical standards deal with the way we treat others and restrain our own
action because of the desires, expectations, or rights of others or because of our
obligations to them

Expenses - Answer-Decrease in retained earnings that results from operations; the cost
of doing business; opposite of revenuse

Fair value - Answer-the amount that a business could sell an asset for, or the amount
that a business could pay to settle liability

Financial accounting - Answer-The branch of accounting that provides information to
people outside the firm

Financial statements - Answer-Business documents that report financial information
about a business entity to decision makers

Financing activities - Answer-Activities that obtain from investors and creditors that cash
needed to launch and sustain the business a section of the statements of cash flow

Generally Accepted Accounting Principles - Answer-Accounting guidelines formulated
by the financial accounting standards board that govern how accounting is practiced

going concern assumption - Answer-holds that the entity will remain in operations for
the foreseeable future

Historical cost principle - Answer-Principle that states that assets and services should
be recorded at their actual cost

income statement - Answer-A financial statement listing an entity's revenues, expenses,
and net income or net loss for a specific period. Also the statement of operations

International Financial Reporting Standards - Answer-Accounting guidelines, formulated
by the International Accounting Standards Board (IASB).U.S companies are expected to
adopt these principles for their financial statements so that they can be compared with
those of companies from other countries

Investing Activities - Answer-Activities that increase or decrease the long-term assets
available to the business, a section of the statement of cash flow

Liability - Answer-An economic obligation (a debt) payable to an individual or an
organization outside the business

limited liability company - Answer-A business organization in which the business (not
the owner) is liable for the company's debts

, Long-term debt - Answer-A liability that falls due beyond one year from the date of the
financial statements

management accounting - Answer-The branch of accounting that generates information
for the internal decisions makers of a business such as top executives

net income, net earnings,net profit - Answer-Excess of total revenues over total
expenses,Revenues minus Expenses=net income

net loss - Answer-Excess of total expenses over total revenue

operating Activities - Answer-Activities that create revenue or expenses in the entity's
major line of business; a section of the statement of cash flow, it also affects the income
statement

Owners equity - Answer-the claim of the owners of a business to the assets of the
business. Also called Capital, Stockholders Equity or net assets

Paid-in Capital - Answer-the amount of stockholders equity that stockholders have
contributed to the corporation. Also called contributed capital

partnership - Answer-An association of two or more persons who co-own a business for
profit

proprietorship - Answer-a business with a single owner

retained earnings - Answer-the amount of stockholders equity that the corporation has
earned through profitable operation and has not given back to stockholders

revenues - Answer-increase in retained earnings from delivering good or services to
customers or clients

shareholders/stockholders - Answer-A person who owns stock in a corporation

Stable-monetary unit assumptions - Answer-the reason for ignoring the effect of inflation
in the accounting records based on the assumption that the dollar's purchasing power is
relatively stable

Statement of cash flow - Answer-Reports cash receipts and cash payments classified
according to the entity's major activities such as operating, investing, and financing

Statement of cash flow - Answer-Reports cash receipts and cash payments classified
according to the entity's major activities ; operating, investing and financing

statement of retained earnings - Answer-Summary of the changes in retained earnings
of a corporation during a specific period

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Exam (elaborations)

Financial Accounting Exam Questions with 100% Correct Answers

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