BUSI 303 EXAM 1 PRACTICE TEST 2026
QUESTIONS WITH ANSWERS SUCCESS A+
◉ What are business activities? Answer: Operating
Investing
Financing
◉ What are the financial statements? Answer: Balance Sheet
(ASSETS = LIABILITIES + EQUITY)
Income Statement
Statement of R/E
Statement of CF
◉ Who is decision making for? Answer: External users (investors)
Creditors
◉ What is accounting? Answer: - Paint a picture of what is going on
behind the scenes
- Language of business
- Maps economic transactions into information that is useful for
decision making
- "Consolidated financials"
,- Better monitor, understand, etc.
- Basic understanding is valuable for all
◉ Why do we need accounting? Answer: - Financial statement
watchers
- SEC
- Gives the picture/story of business as long as it's accurate
- Important to ALL to understand what's going on
◉ What is a business? Answer: An entity that provides goods or
services to customers for a profit
◉ What is profit? Answer: - Revenues - Expenses
- The difference between the revenues earned by delivering goods or
services to customers and the expenses incurred in delivering the
goods and services
◉ What is a successful business? Answer: - A business that
generates sufficient profit to provide the owners with an adequate
return to their investments
- Note: There is a risk/return relationship in all investments...
"enough return for the risk you take"
,◉ What should we note about investments? Answer: There is a
risk/return relationship in all investments... "enough return for the
risk you take"
◉ What are the three types of accounting and what do they focus
on? Answer: Financial Accounting: Investors (external users)
Managerial Accounting: Management -- internal users (design,
production, marketing, human resources, accounting functions)
Tax Accounting: Government (Internal Revenue Code)
◉ What is the financial environment of accounting? Answer:
Operations of Business Entity → Financial Statements → GAAP
◉ What is financial accounting? Answer: - The process of measuring,
recording, and reporting economic information for decision making
purposes
- Reports provided to external users (investors)
- Regulated external reporting (GAAP)
*So basically REPORT the info for INVESTORS under GAAP*
◉ What is the purpose of a 10-K? Answer:
◉ What is the 10-K report? Answer: A Form 10-K is an annual report
required by the U.S. Securities and Exchange Commission (SEC), that
, gives a comprehensive summary of a company's financial
performance.
◉ What is on the 10-K? Answer: US SEC Name
Form Name
Registrant Name
Financial Statements and Supplementary Data
Opinions on the Financial Stmts and Internal Control over Financial
Reporting
Basis for Opinions
Definition and Limitation of Internal Control over Financial
Reporting
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated statements of Cash Flows
◉ What are stock prices based on? Answer: Earning expectations
and growth expected; based on meeting benchmarks
◉ What is the S&P? Answer: Group of 500 stocks; selected stocks;
market tracker; diversified group of firms that give an overall sense
of how the market is doing
QUESTIONS WITH ANSWERS SUCCESS A+
◉ What are business activities? Answer: Operating
Investing
Financing
◉ What are the financial statements? Answer: Balance Sheet
(ASSETS = LIABILITIES + EQUITY)
Income Statement
Statement of R/E
Statement of CF
◉ Who is decision making for? Answer: External users (investors)
Creditors
◉ What is accounting? Answer: - Paint a picture of what is going on
behind the scenes
- Language of business
- Maps economic transactions into information that is useful for
decision making
- "Consolidated financials"
,- Better monitor, understand, etc.
- Basic understanding is valuable for all
◉ Why do we need accounting? Answer: - Financial statement
watchers
- SEC
- Gives the picture/story of business as long as it's accurate
- Important to ALL to understand what's going on
◉ What is a business? Answer: An entity that provides goods or
services to customers for a profit
◉ What is profit? Answer: - Revenues - Expenses
- The difference between the revenues earned by delivering goods or
services to customers and the expenses incurred in delivering the
goods and services
◉ What is a successful business? Answer: - A business that
generates sufficient profit to provide the owners with an adequate
return to their investments
- Note: There is a risk/return relationship in all investments...
"enough return for the risk you take"
,◉ What should we note about investments? Answer: There is a
risk/return relationship in all investments... "enough return for the
risk you take"
◉ What are the three types of accounting and what do they focus
on? Answer: Financial Accounting: Investors (external users)
Managerial Accounting: Management -- internal users (design,
production, marketing, human resources, accounting functions)
Tax Accounting: Government (Internal Revenue Code)
◉ What is the financial environment of accounting? Answer:
Operations of Business Entity → Financial Statements → GAAP
◉ What is financial accounting? Answer: - The process of measuring,
recording, and reporting economic information for decision making
purposes
- Reports provided to external users (investors)
- Regulated external reporting (GAAP)
*So basically REPORT the info for INVESTORS under GAAP*
◉ What is the purpose of a 10-K? Answer:
◉ What is the 10-K report? Answer: A Form 10-K is an annual report
required by the U.S. Securities and Exchange Commission (SEC), that
, gives a comprehensive summary of a company's financial
performance.
◉ What is on the 10-K? Answer: US SEC Name
Form Name
Registrant Name
Financial Statements and Supplementary Data
Opinions on the Financial Stmts and Internal Control over Financial
Reporting
Basis for Opinions
Definition and Limitation of Internal Control over Financial
Reporting
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated statements of Cash Flows
◉ What are stock prices based on? Answer: Earning expectations
and growth expected; based on meeting benchmarks
◉ What is the S&P? Answer: Group of 500 stocks; selected stocks;
market tracker; diversified group of firms that give an overall sense
of how the market is doing
