4 Financial Statements - Answer 1) Balance Sheet
2) Income Statement
3) Statement of Owners Equity
4) Statement of Cash Flows
GAAP - Answer Generally accepted accounting principles (Rules for comparison between financial statements, established by private FASB and public the public SEC)...
Accounting 2200 Final Exam 1
Questions And All Correct Answers.
4 Financial Statements - Answer 1) Balance Sheet
2) Income Statement
3) Statement of Owners Equity
4) Statement of Cash Flows
GAAP - Answer Generally accepted accounting principles (Rules for comparison between financial
statements, established by private FASB and public the public SEC)
Balance Sheet - Answer Statement of financial position (Assets, Liabilities, Equity). Prepared at a
specific point in time.
Assets - Answer Economic resources owned
Liabilities - Answer Debts owed
Equity - Answer Amount of owner's investment (two components with corporations, other two forms
have only contributed capital)
Fundamental Accounting Equation - Answer Assets = Liabilities + Equity
Current Assets - Answer Expire or converted to cash within one year. Cash, Accounts Receivable,
Inventory, Supplies
Long Term Assets - Answer Expire or converted to cash after one year. Property-Plant-Equipment (P-P-
E), Trademark, Patent, Copyright
, Historical Cost Concept - Answer Assets are shown at their cost to aquire, not their current value
Current Liabilities - Answer Due within one year
Include accounts payable, short term notes payable (bank loan), salaries payable, income taxes payable,
utilities payable
note: last three examples of accrued liabilities
Long-Term Liabilities - Answer Due after one year
Include long term notes payable, mortgage payable, bonds payable
Contributed Capital/Common Stock - Answer Investments made by owners by buying stock (only type
of equity for non-corporations even though they don't sell stock)
Retained Earnings - Answer Net income earned that is kept for growth and expansion rather than paid
out in dividends
Income Statement - Answer financial statement that shows profitability for the company for a period of
time (Revenues and Expenses)
Revenues - Answer Amounts earned during the accounting period (anything that says revenue EXCEPT
unearned revenue)
Expenses - Answer Costs incurred in the process of earning revenue (anything that says expense +
COGS)
Gross Profit - Answer Profit earned from selling inventory (If expense>revenue, it's a net loss)
Statement of Owner's Equity - Answer FS that shows changes in equity for a period of time (same
period as income statement)
Common Stock (AKA Contributed Captial) Equation - Answer Beginning Balance (@ Jan 1) + Additional
Sales of Common Stock = Ending Contributed Capital (@ Dec 31)
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