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Fundamentals of Accounting - Exam 1 Stimulator Questions Fully Solved.
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Accounting - Answer a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers Financial Accounting Reports - Answer - Periodic financial statements and related disclosures - external de...

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  • October 1, 2024
  • 19
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • financial accounting reports

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  • Fundamentals of Accounting
  • Fundamentals of Accounting

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Fundamentals of Accounting - Exam 1
Stimulator Questions Fully Solved.
Accounting - Answer a system that collects and processes (analyzes, measures, and records) financial
information about an organization and reports that information to decision makers



Financial Accounting Reports - Answer - Periodic financial statements and related disclosures

- external decision makers

- creditors, investors, suppliers, customers



Managerial Accounting Reports - Answer - Detailed plans and continuous performance reports

- internal decision makers

- managers



*Balance Sheet* - Answer (Statement of Financial Position) reports the amount of assets, liabilities, and
stockholders' equity of an accounting entity at a point in time.



Structure of Balance Sheet - Answer 1. *Name of entity,* Maxidrive Corp.

2. *Title of the Statement,* Balance Sheet.

3. *Specific Date of the Statement,* At December 31, 2010

4. *Unit of Measure* (in thousands of dollars)



*Accounting Entity* - Answer the organization for which financial data are to be collected



*Basic Accounting Equation* (Balance Sheet Equation) - Answer Assets = Liabilities + Stockholders'
Equity



- Assets: economic resources

- Liabilities + Stockholders' Equity: sources of financing for the economic resources

,- Liabilities: from creditors

- Stockholders' Equity: from stockholders



Financial Position - Answer the economic resources that the company owns and the sources of
financing for those resources



Assets - Answer the economic resources owned by the company; expected to provide future benefits
owned by the entity as a result of past transactions



Balance Sheet Assets: Cash - Answer the amount of cash in the company's bank accounts



Balance Sheet Assets: Accounts Receivable - Answer - amounts owed by customers from prior sales

- promise of future payment

- later collected in cash



Balance Sheet Assets: Inventories - Answer parts and completed but unsold 'disk drives' (product)



Balance Sheet Assets: Plant and Equipment - Answer factories and production machinery



Balance Sheet Assets: Land - Answer land on which the factories are built



Liabilities - Answer the company's debts or obligations



Accounts Payable - Answer - on the balance sheet under liabilities

- amounts owed to suppliers for prior purchases

- Result from the purchase of goods or services from suppliers on credit without a formal written
contract (or a note).



Notes Payable - Answer - on the balance sheet under liabilities

- amounts owed on written debt contracts

, - result from cash borrowings based on a formal written debt contract with lending institutions such as
banks



Stockholders' Equity - Answer indicates the amount of financing provided by owners of the business
and earnings.



Contributed Capital - Answer - On the balance sheet under stockholders equity

- amounts invested in the business by stockholders

- the investment of cash and other assents in the business by the owners



Retained Earnings - Answer - On the balance sheet under stockholders equity

- past earnings not distributed to stockholders

- the amount of earnings (profits) reinvested n the business (and thus not distributed to stockholders in
the form of dividends)



The *Income Statement* (Statement of Income, Statement of Earnings, Statement of Operation) -
Answer - reports the revenues less the expenses of the accounting period

(Revenue - Expenses = Net Income)

- reports the accountant's primary measure of performance in a business (profit, net income in
accounting)



*Accounting Period* - Answer - is the time period covered by the financial statements



Elements of the Income Statement: Revenues - Answer - Earned from the sale of goods or services to
customers

- Normally reported for goods or services that have been sold to a customer *whether or not they have
been paid for* (accounts receivable/promise of future payment included)

- Various terms are used in income statements to describe different sources of revenue (e.g., provision of
services, sale of goods, rental property).



*Sales Revenue: cash and promises received from the sale of goods and serves

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