ECU ACCT 2401 Exam 1 Study Guide | Accounting Review, Key Concepts &
Practice Questions
Liabilities - ANS ✔✔accounts payable, notes payable, accrued liabilities, unearned revenues
Unearned Revenue - ANS ✔✔liability created when business collects cash before work is done
Revenue increases ____ from the sales of products and services - ANS ✔✔equity
Expenses decrease ____ from costs of providing products - ANS ✔✔equity
Shareholders are not - ANS ✔✔personally liable for corporate acts and debts
Revenue _____ equity - ANS ✔✔increases
Expenses ____ equity - ANS ✔✔decrease
Dividends _____ equity - ANS ✔✔reduce
GAAP - ANS ✔✔Generally Accepted Accounting Principles
GAAP aims to - ANS ✔✔make info relevant, reliable, and comparable
Order used in preparing financial statements - ANS ✔✔who, what, when
, Income Statement - ANS ✔✔describes company's revenues and expenses along with net
income or loss over period of time
Net Income ____ equity - ANS ✔✔increases
Net income occurs when - ANS ✔✔revenues exceed expenses
Statement of Retained Earnings - ANS ✔✔reports changes in retained earnings
Balance Sheet - ANS ✔✔describes a company's financial position (types and amounts of assets,
liabilities, and equity) at a point in time
Statements of Cash Flows - ANS ✔✔identifies cash inflows (receipts) and cash outflows
(payments) over a period of time
Account - ANS ✔✔a record of increases and decreases in a specific asset, liability, equity,
revenue, or expense item
Ledger - ANS ✔✔record of all accounts used in a company
Asset Accounts - ANS ✔✔assets are resources owned or controlled by a company, have
expected future benefits
Accounts Receivable - ANS ✔✔held by a seller and refer to promises of payment from
customers to seller
Accounts Receivable transactions are also called - ANS ✔✔credit sales, or on credit
Practice Questions
Liabilities - ANS ✔✔accounts payable, notes payable, accrued liabilities, unearned revenues
Unearned Revenue - ANS ✔✔liability created when business collects cash before work is done
Revenue increases ____ from the sales of products and services - ANS ✔✔equity
Expenses decrease ____ from costs of providing products - ANS ✔✔equity
Shareholders are not - ANS ✔✔personally liable for corporate acts and debts
Revenue _____ equity - ANS ✔✔increases
Expenses ____ equity - ANS ✔✔decrease
Dividends _____ equity - ANS ✔✔reduce
GAAP - ANS ✔✔Generally Accepted Accounting Principles
GAAP aims to - ANS ✔✔make info relevant, reliable, and comparable
Order used in preparing financial statements - ANS ✔✔who, what, when
, Income Statement - ANS ✔✔describes company's revenues and expenses along with net
income or loss over period of time
Net Income ____ equity - ANS ✔✔increases
Net income occurs when - ANS ✔✔revenues exceed expenses
Statement of Retained Earnings - ANS ✔✔reports changes in retained earnings
Balance Sheet - ANS ✔✔describes a company's financial position (types and amounts of assets,
liabilities, and equity) at a point in time
Statements of Cash Flows - ANS ✔✔identifies cash inflows (receipts) and cash outflows
(payments) over a period of time
Account - ANS ✔✔a record of increases and decreases in a specific asset, liability, equity,
revenue, or expense item
Ledger - ANS ✔✔record of all accounts used in a company
Asset Accounts - ANS ✔✔assets are resources owned or controlled by a company, have
expected future benefits
Accounts Receivable - ANS ✔✔held by a seller and refer to promises of payment from
customers to seller
Accounts Receivable transactions are also called - ANS ✔✔credit sales, or on credit
