Exam (elaborations)
Financial Accounting Final Exam Questions and Answers
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- Accounting
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- Accounting
Financial Accounting Final Exam Questions and Answers
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Financial Accounting Final ExamQuestions and Answers
Separate Entity Assumption - Answer-the financial reports of a business are assumed to
include the results of only the business's activities
Cost - Answer-the amount of resources that a company sacrifices to obtain goods or
services; often said to be incurred when the company pays cash or uses credit to
acquire the item
Revenue Recognition Principle - Answer-revenues are reported when goods or services
are delivered, there is evidence of an arrangement for customer payment, the price is
fixed or determinable, and collection is reasonably assured
Expense Recognition Principle - Answer-expenses are recorded when incurred in
earning revenue; also called "matching"
Accrual Basis Accounting - Answer-records revenues when they are earned and
expenses in the same period as the revenues to which they relate, regardless of the
timing of cash receipts or payments
Adjusting Journal Entries - Answer-entries necessary at the end of each accounting
period to measure all revenues and expenses of that period
Contra Account - Answer-an account that is an offset to, or reduction of, another
account
Carrying Value - Answer-the amount at which an asset or liability is reported ("carried")
in the financial statements; also known as "net book value" or "book value"
Dividends - Answer-the distribution of a company's earnings to its stockholders' as a
return on their investment; not an expense!
Permanent Accounts - Answer-accounts that track financial results from year to year by
carrying their ending balances into the next year
Temporary Accounts - Answer-accounts that track financial results for a limited period of
time by having their balances zeroed out at the end of each accounting year
T-accounts - Answer-a simplified version of a ledger account used for summarizing the
effects of journal entries
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