Accounting 231 Exam 1 Question and
answers already passed 2025/2026
What is a Business Entity? - correct answer ✔The business entity principle dictates that the financial
affairs of a business organization must be kept separate from personal financial affairs of a business
owners. This is necessary because, if the owners of a business choose to place personal assets into the
business, then those assets are now considered to belong to the business and no longer to the owners.
What is accounting - correct answer ✔The process of recognizing, measuring, recording and reporting
information about business transactions.
Accounting Must: - correct answer ✔*Recognize business transactions
*Measures business transactions
*Record business transaction
*Report business transactions over a period of time
What is the Cost Principle? - correct answer ✔This principle states that when a business acquires assets
or services, they should be recorded at their actual cost, also called historical cost. In other words, the
amount paid for the asset or services is the amount recorded as its value.
What are Business Transactions? And why are they important? - correct answer ✔Capturing the
financial impact of events on the entity in order to generate financial statements at the end of each
period. Its important because it helps evaluates performance and its used as a tool to make financial
decisions.
Generally Accepted Accounting Principles (GAAP) - correct answer ✔The rules, principles, and concepts
established by the accounting profession that govern financial accounting.
Financial Accounting Standards Board (FASB) - correct answer ✔In the US, most GAAP is developed by
FASB. FASB is seven-person group primarily responsible for the establishment of GAAP.
answers already passed 2025/2026
What is a Business Entity? - correct answer ✔The business entity principle dictates that the financial
affairs of a business organization must be kept separate from personal financial affairs of a business
owners. This is necessary because, if the owners of a business choose to place personal assets into the
business, then those assets are now considered to belong to the business and no longer to the owners.
What is accounting - correct answer ✔The process of recognizing, measuring, recording and reporting
information about business transactions.
Accounting Must: - correct answer ✔*Recognize business transactions
*Measures business transactions
*Record business transaction
*Report business transactions over a period of time
What is the Cost Principle? - correct answer ✔This principle states that when a business acquires assets
or services, they should be recorded at their actual cost, also called historical cost. In other words, the
amount paid for the asset or services is the amount recorded as its value.
What are Business Transactions? And why are they important? - correct answer ✔Capturing the
financial impact of events on the entity in order to generate financial statements at the end of each
period. Its important because it helps evaluates performance and its used as a tool to make financial
decisions.
Generally Accepted Accounting Principles (GAAP) - correct answer ✔The rules, principles, and concepts
established by the accounting profession that govern financial accounting.
Financial Accounting Standards Board (FASB) - correct answer ✔In the US, most GAAP is developed by
FASB. FASB is seven-person group primarily responsible for the establishment of GAAP.
