Exam (elaborations)
Financial & Managerial Accounting Exam 1 Questions with Complete Answers
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- Accounting
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- Accounting
Financial & Managerial Accounting Exam 1 Questions with Complete Answers
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Financial & Managerial AccountingExam 1 Questions with Complete
Answers
Accounting - Answer-an information and measurement system that identifies, records
and communicates relevant, reliable and comparable information about an
organizations activities
Recordkeeping/Bookkeeping - Answer-the recording of transactions and events, either
manually or electronically
External Users - Answer-not directly involved in running the organization, need to all
coincide with one method
Internal Information Users - Answer-those directly involved in managing and operating
an organization, not so concerned with others
Ethics - Answer-beliefs that distinguish right from wrong
Measurement Principle (cost principle) - Answer-accounting information is based on
actual cost
Revenue (sales) Recognition - Answer-provides guidance on when a company must
recognize revenue
Expense Recognition Principle (matching principle) - Answer-record the expenses it
incurred to generate the revenue reported
Full Disclosure - Answer-prescribes that a company report the details behind financial
statements that would impact users' decisions.
Accounting Equation (simple) - Answer-Assets = Liabilities + Equity
Assets - Answer-resources a company owns or controls
Liabilities - Answer-creditors' claims on assets (reflect company obligations to provide
assets, products or services to others)
Equity (net assets/residual equity) - Answer-the owner's claim on assets, has two parts:
-contributed capital
-retained earnings
, Contributed Capital - Answer-amount that stockholders invest in the company included
under common stock
Retained Earnings - Answer-refer to income (revenues less expenses) that has not
been distributed to its stockholders
net income - cash dividends = retained earnings
Dividends - Answer-distribution of assets to stockholders
Revenues - Answer-Increase retained earnings and are resources generated from a
company's earnings activities
Expenses - Answer-decrease retained earnings and are the cost of assets or services
used to earn revenues
Accounting Equation (full and complicated) - Answer-Assets = liabilities + Equity
[contributed capital + retained earnings]
Assets = liabilities + common stock + retained earnings [- dividends + revenue -
expenses]
Net Income - Answer-when revenues exceed expenses (increase equity)
revenue - expenses
Net loss - Answer-when expenses exceed revenues (decrease equity)
Income Statement - Answer-describes a company's revenues and expenses along with
the resulting net income or loss over a period of time due to earnings activities
Statement of Retained Earnings - Answer-explains changes in equity from net income
(or loss) and from any dividends over a period of time
Balance Sheet - Answer-describes a company's financial position (types and amounts
of assets, liabilities, and equity) at a point in time
Statement of cash flows - Answer-identifies cash inflows (receipts) and cash outflows
(payments) over a period of time
Return on Assets - Answer-Net income / Avg. total assets
Asset Accounts - Answer-Cash, Accounts Receivable, Note Receivable, Prepaid,
Supplies, Equipment, Buildings, Land
Liabilities Accounts - Answer-Accounts Payable, Note Payable, Unearned Revenue
Accounts, Accrued Liabilities
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