ACC 231 Exam 1 Study Guide
Question and answers verified to pass
2025/2026
Accrual Basis of Accounting - correct answer ✔the method of accounting that recognizes and records
revenues when earned
Closing costs accomplish... - correct answer ✔1) Transfer revenues, expenses, and dividends to
retained earnings. 2) Zero out the revenues, expenses, and dividends to prepare these accounts for the
next accounting period. 3) Bring the retained earnings account to its correct ending balance.
Balance Sheet - correct answer ✔A financial statement that reports assets, liabilities, and owner's
equity on a specific date.
Income Statement - correct answer ✔a financial statement that gives operating results for a specific
period
Increase with credits - correct answer ✔Revenues, equity, and liabilities
Increase with debits - correct answer ✔Assets, dividends, and expenses
Net Income (loss) equals - correct answer ✔Revenues minus Expenses
Assets equal - correct answer ✔Liabilities + Stockholders equity
Transaction - correct answer ✔A business activity that changes assets, liabilities, or owner's equity
, Partnership - correct answer ✔A business organization owned by two or more people
Sole Proprietorship - correct answer ✔A business owned by one person
Dividends - correct answer ✔Payments of cash from a corporation to its stockholders
Corporation - correct answer ✔Organization form that can have an unlimited life
Assets - correct answer ✔Economic resources owned by a business
Liabilities - correct answer ✔Amounts owed to creditors
Reliability Principle - correct answer ✔Data must be verifiable
GAAP (Generally Accepted Accounting Principles) - correct answer ✔The standards and rules
developed by FASB
What type of accounting is required by GAAP? - correct answer ✔Accrual
Business Entity Principle - correct answer ✔A business is accounted for separately from other business
entities, including its owner.
Cost Principle - correct answer ✔A principle that states that acquired assets and services should be
recorded at their actual cost.
The left side of an account is - correct answer ✔used to record DEBITS
Question and answers verified to pass
2025/2026
Accrual Basis of Accounting - correct answer ✔the method of accounting that recognizes and records
revenues when earned
Closing costs accomplish... - correct answer ✔1) Transfer revenues, expenses, and dividends to
retained earnings. 2) Zero out the revenues, expenses, and dividends to prepare these accounts for the
next accounting period. 3) Bring the retained earnings account to its correct ending balance.
Balance Sheet - correct answer ✔A financial statement that reports assets, liabilities, and owner's
equity on a specific date.
Income Statement - correct answer ✔a financial statement that gives operating results for a specific
period
Increase with credits - correct answer ✔Revenues, equity, and liabilities
Increase with debits - correct answer ✔Assets, dividends, and expenses
Net Income (loss) equals - correct answer ✔Revenues minus Expenses
Assets equal - correct answer ✔Liabilities + Stockholders equity
Transaction - correct answer ✔A business activity that changes assets, liabilities, or owner's equity
, Partnership - correct answer ✔A business organization owned by two or more people
Sole Proprietorship - correct answer ✔A business owned by one person
Dividends - correct answer ✔Payments of cash from a corporation to its stockholders
Corporation - correct answer ✔Organization form that can have an unlimited life
Assets - correct answer ✔Economic resources owned by a business
Liabilities - correct answer ✔Amounts owed to creditors
Reliability Principle - correct answer ✔Data must be verifiable
GAAP (Generally Accepted Accounting Principles) - correct answer ✔The standards and rules
developed by FASB
What type of accounting is required by GAAP? - correct answer ✔Accrual
Business Entity Principle - correct answer ✔A business is accounted for separately from other business
entities, including its owner.
Cost Principle - correct answer ✔A principle that states that acquired assets and services should be
recorded at their actual cost.
The left side of an account is - correct answer ✔used to record DEBITS
