MBA Accounting Exam 1 Questions &
Answers 2024/2025
Accounting - ANSWERSID, records, communicates economic events of an org to interested
internal/external users
GAAP - ANSWERSStandards accepted/universally practiced that indicate how to report economic events
historical cost principle - ANSWERScompanies record assets at their cost
fair value principle - ANSWERSassets/liabilities should be reported at fair value (the price received to sell
an asset/settle a liability)
monetary unit assumption - ANSWERScompanies include only transaction data that can be expressed in
terms of money in their acct records
economic entity assumption - ANSWERSactivities of company kept separate/distinct from activities of
owner/others
proprietorship - ANSWERSone owner; small service; owner is personally liable
partnership - ANSWERS2+ owners; retail/service; unlimited personal liability; partnership agreement
corporation - ANSWERSownership in stock shares; separate legal entity; limited liability
A=L+SE - ANSWERSaccounting equation
SE=CS+RE - ANSWERSstockholder's equity equation
, RE=R-E-D - ANSWERSretained earnings equation
assets - ANSWERSresources a business owns; provide future services/benefits
liabilities - ANSWERSclaims against assets
creditors - ANSWERSparty to whom money is owed
stockholder's equity - ANSWERSownership claim on total assets; AKA residual equity
revenues - ANSWERSbusiness activities entered into for the purpose of earning income
dividends - ANSWERSdistribution of cash/other assets to stockholders
expenses - ANSWERScost of assets/services in the process of earning revenue
transactions - ANSWERSbusiness's economic events recorded by accountants; internal/external; has dual
effect on acct equation
income statement, retained earnings statement, balance sheet, statement of cash flows - ANSWERS4
financial statements
income statement - ANSWERSreports company's operations over a specific period of time; R followed by
E; shows net income (or loss)
R-E=NI
retained earnings statement - ANSWERSreports changes in RE for a specific period of time (same time
period as IS)
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