WICHITA STATE UNIVERSITY ACCOUNTING 1 FINAL EXAM REVIEW – EXAM PRACTICE
QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2026
Q&A | INSTANT DOWNLOAD PDF
*CORE DOMAINS*
*• Accounting Principles and Concepts*
*• Double-Entry Bookkeeping System*
*• Financial Statements Preparation*
*• Journal Entries and Ledger Posting*
*• Adjusting and Closing Entries*
*• Accrual vs Cash Accounting*
*• Internal Controls and Ethics*
*• Inventory Valuation Methods*
*• Depreciation and Asset Accounting*
*INTRODUCTION*
This exam review is designed to assess foundational and applied knowledge in introductory
accounting principles. It evaluates understanding of financial reporting, transaction
recording, and the preparation of core financial statements. The assessment includes
multiple-choice questions and scenario-based problems reflecting real-world accounting
,situations. Students are expected to demonstrate analytical thinking, accuracy in journal
entries, and comprehension of accounting standards. The questions emphasize both
theoretical understanding and practical application, ensuring readiness for academic
evaluations and professional accounting environments where decision-making, compliance,
and financial accuracy are essential.
SECTION ONE (QUESTIONS 1–50)
1. Which accounting principle states that revenue should be recognized when earned?
A. Matching principle
B. Revenue recognition principle
C. Cost principle
D. Conservatism principle
🟢 Correct Answer: B. Revenue recognition principle
🔴 Explanation: Revenue is recorded when it is earned, not necessarily when cash is
received.
,2. What is the normal balance of an asset account?
A. Credit
B. Debit
C. Zero
D. Negative
🟢 Correct Answer: B. Debit
🔴 Explanation: Assets increase with debits and decrease with credits.
3. Which financial statement shows a company’s financial position at a specific 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.
4. A debit entry increases which account type?
, A. Liabilities
B. Revenue
C. Expenses
D. Common stock
🟢 Correct Answer: C. Expenses
🔴 Explanation: Expenses normally increase with debits.
5. Which of the following is NOT a primary financial statement?
A. Income statement
B. Balance sheet
C. Trial balance
D. Cash flow statement
🟢 Correct Answer: C. Trial balance
🔴 Explanation: The trial balance is an internal report, not a financial statement.
6. What is the accounting equation?
A. Assets = Revenue – Expenses
B. Assets = Liabilities + Equity
QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2026
Q&A | INSTANT DOWNLOAD PDF
*CORE DOMAINS*
*• Accounting Principles and Concepts*
*• Double-Entry Bookkeeping System*
*• Financial Statements Preparation*
*• Journal Entries and Ledger Posting*
*• Adjusting and Closing Entries*
*• Accrual vs Cash Accounting*
*• Internal Controls and Ethics*
*• Inventory Valuation Methods*
*• Depreciation and Asset Accounting*
*INTRODUCTION*
This exam review is designed to assess foundational and applied knowledge in introductory
accounting principles. It evaluates understanding of financial reporting, transaction
recording, and the preparation of core financial statements. The assessment includes
multiple-choice questions and scenario-based problems reflecting real-world accounting
,situations. Students are expected to demonstrate analytical thinking, accuracy in journal
entries, and comprehension of accounting standards. The questions emphasize both
theoretical understanding and practical application, ensuring readiness for academic
evaluations and professional accounting environments where decision-making, compliance,
and financial accuracy are essential.
SECTION ONE (QUESTIONS 1–50)
1. Which accounting principle states that revenue should be recognized when earned?
A. Matching principle
B. Revenue recognition principle
C. Cost principle
D. Conservatism principle
🟢 Correct Answer: B. Revenue recognition principle
🔴 Explanation: Revenue is recorded when it is earned, not necessarily when cash is
received.
,2. What is the normal balance of an asset account?
A. Credit
B. Debit
C. Zero
D. Negative
🟢 Correct Answer: B. Debit
🔴 Explanation: Assets increase with debits and decrease with credits.
3. Which financial statement shows a company’s financial position at a specific 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.
4. A debit entry increases which account type?
, A. Liabilities
B. Revenue
C. Expenses
D. Common stock
🟢 Correct Answer: C. Expenses
🔴 Explanation: Expenses normally increase with debits.
5. Which of the following is NOT a primary financial statement?
A. Income statement
B. Balance sheet
C. Trial balance
D. Cash flow statement
🟢 Correct Answer: C. Trial balance
🔴 Explanation: The trial balance is an internal report, not a financial statement.
6. What is the accounting equation?
A. Assets = Revenue – Expenses
B. Assets = Liabilities + Equity
