AAMI ACCOUNTING 1 FINAL REVIEW
EXAM PAPER 2026 QUESTIONS WITH
CORRECT ANSWERS
⫸ Cash is considered to be: Answer: Asset
⫸ Which of the following is an example of a liability: Answer:
Accounts Payable
⫸ True or False - The expanded accounting equation is: Assets =
Liabilities + Owner's Equity Answer: False
⫸ Gross profit minus expenses equals: Answer: Net Profit
⫸ Which of the following is not factored into computing Owner's
Equity in the expanded Accounting equation: Answer: Owner's Equity =
[Capital In - Withdrawals] + [Revenue - Expenses]
⫸ Revenue after deducting costs of goods sold is called: Answer: Gross
Profit
⫸ John Smith gives his business $10,000.00 from his own personal
funds. Which of the following accounts does this transaction affect?
Answer: Capital
, ⫸ True or False - The basic accounting equation is: Assets = Liabilities
+ Owner's Equity Answer: True
⫸ A firm has $15,000.00 in liabilities and $22,500.00 in assets. In order
to compute the Basic Accounting Equation, what must Owner's Equity
be? Answer: $7,500
⫸ Another name for ownership is: Answer: Equity
⫸ John Smith takes $5,000.00 back from his business to repay himself
some of the money he loaned to his business. Which account would be
affected: Answer: Withdrawals
⫸ The costs of doing business are termed: Answer: Liabilities
⫸ True or False - Net Loss is defined as the amount remaining when
revenue exceeds expenses. Answer: False, that is net profit
⫸ True or False - Expenses increase owner's equity. Answer: False
⫸ Which account below should NOT have a credit balance? Answer:
Expenses
EXAM PAPER 2026 QUESTIONS WITH
CORRECT ANSWERS
⫸ Cash is considered to be: Answer: Asset
⫸ Which of the following is an example of a liability: Answer:
Accounts Payable
⫸ True or False - The expanded accounting equation is: Assets =
Liabilities + Owner's Equity Answer: False
⫸ Gross profit minus expenses equals: Answer: Net Profit
⫸ Which of the following is not factored into computing Owner's
Equity in the expanded Accounting equation: Answer: Owner's Equity =
[Capital In - Withdrawals] + [Revenue - Expenses]
⫸ Revenue after deducting costs of goods sold is called: Answer: Gross
Profit
⫸ John Smith gives his business $10,000.00 from his own personal
funds. Which of the following accounts does this transaction affect?
Answer: Capital
, ⫸ True or False - The basic accounting equation is: Assets = Liabilities
+ Owner's Equity Answer: True
⫸ A firm has $15,000.00 in liabilities and $22,500.00 in assets. In order
to compute the Basic Accounting Equation, what must Owner's Equity
be? Answer: $7,500
⫸ Another name for ownership is: Answer: Equity
⫸ John Smith takes $5,000.00 back from his business to repay himself
some of the money he loaned to his business. Which account would be
affected: Answer: Withdrawals
⫸ The costs of doing business are termed: Answer: Liabilities
⫸ True or False - Net Loss is defined as the amount remaining when
revenue exceeds expenses. Answer: False, that is net profit
⫸ True or False - Expenses increase owner's equity. Answer: False
⫸ Which account below should NOT have a credit balance? Answer:
Expenses
