UNIVERSITY OF NEW HAVEN ACCOUNTING 1 FINAL EXAM REVIEW – EXAM PRACTICE
QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2026
Q&A | INSTANT DOWNLOAD PDF
*CORE DOMAINS
Accounting Equation and Financial Statements
Double-Entry Bookkeeping System
Journal Entries and Ledger Posting
Trial Balance Preparation
Adjusting Entries (Accruals and Deferrals)
Depreciation Methods
Revenue Recognition Principles
Expense Recognition and Matching Principle
Internal Controls and Ethics
Financial Statement Analysis*
INTRODUCTION
This exam review is designed to assess foundational and applied knowledge in introductory
financial accounting. It evaluates understanding of core accounting principles, transaction
recording, and preparation of financial statements. Questions are structured in multiple-
,choice and scenario-based formats to reflect real-world business situations. Students are
expected to demonstrate analytical thinking, accuracy in journal entries, and proper
application of accounting standards. The assessment emphasizes decision-making skills,
financial interpretation, and ethical considerations essential for professional accounting
practice in business environments.
SECTION ONE: QUESTIONS 1–50
Question 1
Which of the following best represents the basic accounting equation?
A. Assets = Liabilities − Equity
B. Assets = Liabilities + Equity
C. Revenue = Assets − Liabilities
D. Equity = Assets + Liabilities
🟢 Correct Answer: B. Assets = Liabilities + Equity
🔴 Explanation: The fundamental accounting equation shows that a company’s assets are
financed by liabilities and owner’s equity.
Question 2
A business purchases equipment for cash. What is the effect on the accounting equation?
,A. Increase assets and increase liabilities
B. Decrease assets and increase equity
C. No change in total assets
D. Increase liabilities and decrease assets
🟢 Correct Answer: C. No change in total assets
🔴 Explanation: One asset (cash) decreases while another asset (equipment) increases,
leaving total assets unchanged.
Question 3
Which financial statement shows a company’s financial position at a point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Retained Earnings Statement
🟢 Correct Answer: C. Balance Sheet
🔴 Explanation: The balance sheet reports assets, liabilities, and equity at a specific date.
, Question 4
What is the normal balance of an asset account?
A. Credit
B. Debit
C. Either debit or credit
D. Zero
🟢 Correct Answer: B. Debit
🔴 Explanation: Asset accounts increase with debits and decrease with credits.
Question 5
Which principle requires expenses to be matched with revenues?
A. Revenue Recognition Principle
B. Matching Principle
C. Cost Principle
D. Full Disclosure Principle
🟢 Correct Answer: B. Matching Principle
🔴 Explanation: Expenses are recorded in the same period as the revenues they help
generate.
QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2026
Q&A | INSTANT DOWNLOAD PDF
*CORE DOMAINS
Accounting Equation and Financial Statements
Double-Entry Bookkeeping System
Journal Entries and Ledger Posting
Trial Balance Preparation
Adjusting Entries (Accruals and Deferrals)
Depreciation Methods
Revenue Recognition Principles
Expense Recognition and Matching Principle
Internal Controls and Ethics
Financial Statement Analysis*
INTRODUCTION
This exam review is designed to assess foundational and applied knowledge in introductory
financial accounting. It evaluates understanding of core accounting principles, transaction
recording, and preparation of financial statements. Questions are structured in multiple-
,choice and scenario-based formats to reflect real-world business situations. Students are
expected to demonstrate analytical thinking, accuracy in journal entries, and proper
application of accounting standards. The assessment emphasizes decision-making skills,
financial interpretation, and ethical considerations essential for professional accounting
practice in business environments.
SECTION ONE: QUESTIONS 1–50
Question 1
Which of the following best represents the basic accounting equation?
A. Assets = Liabilities − Equity
B. Assets = Liabilities + Equity
C. Revenue = Assets − Liabilities
D. Equity = Assets + Liabilities
🟢 Correct Answer: B. Assets = Liabilities + Equity
🔴 Explanation: The fundamental accounting equation shows that a company’s assets are
financed by liabilities and owner’s equity.
Question 2
A business purchases equipment for cash. What is the effect on the accounting equation?
,A. Increase assets and increase liabilities
B. Decrease assets and increase equity
C. No change in total assets
D. Increase liabilities and decrease assets
🟢 Correct Answer: C. No change in total assets
🔴 Explanation: One asset (cash) decreases while another asset (equipment) increases,
leaving total assets unchanged.
Question 3
Which financial statement shows a company’s financial position at a point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Retained Earnings Statement
🟢 Correct Answer: C. Balance Sheet
🔴 Explanation: The balance sheet reports assets, liabilities, and equity at a specific date.
, Question 4
What is the normal balance of an asset account?
A. Credit
B. Debit
C. Either debit or credit
D. Zero
🟢 Correct Answer: B. Debit
🔴 Explanation: Asset accounts increase with debits and decrease with credits.
Question 5
Which principle requires expenses to be matched with revenues?
A. Revenue Recognition Principle
B. Matching Principle
C. Cost Principle
D. Full Disclosure Principle
🟢 Correct Answer: B. Matching Principle
🔴 Explanation: Expenses are recorded in the same period as the revenues they help
generate.
