ACCT 201 Chapter 1-3 Exam Questions and
Correct Answers
What is the accounting equation?
assets = liabilities + stockholders equity
Name examples of Assets
cash, inventory, equipment, buildings, land, accounts receivable
What is accounts receivable?
money owed to a company by its debtors
What is accounts payable?
money the business owes to its suppliers
Name examples of liabilities
account payable, interest, notes payable
What is shareholders equity
assets-liabilities. the remaining value of money
What is a financial statement?
financial documents that are put out at the end of a period (end of year)
What is an account?
an account is a record of increases and decreases in a specific asset, liability, equity, revenue,
or expense
What are the different types of financial statements?
, incomes statement, statement of retained earnings, balance sheet, statement of cash flows,
notes to the financial statements
What is an Income Statement?
includes revenues, expenses, and net income
The financial performance of a business
what is the equation for net income
Revenues - Expenses
What is a Statement of Retained Earnings?
money that us left over after paying for expenses/liabilities that is kept with the company
What is a Balance Sheet?
assets, liabilities, stockholders equity
The financial position of a business
What is a Statement of Cash Flows?
reports inflows and outflows of cash during the accounting period in the categories of
operating, investing, and financing
What is an operating activity?
daily activities of running a business (selling goods, paying employees)
what is investing activity
the purchasing or selling of a long term asset (land, building, copyright)
what is financing activity?
how a business raises money by not selling product (stocks)
Correct Answers
What is the accounting equation?
assets = liabilities + stockholders equity
Name examples of Assets
cash, inventory, equipment, buildings, land, accounts receivable
What is accounts receivable?
money owed to a company by its debtors
What is accounts payable?
money the business owes to its suppliers
Name examples of liabilities
account payable, interest, notes payable
What is shareholders equity
assets-liabilities. the remaining value of money
What is a financial statement?
financial documents that are put out at the end of a period (end of year)
What is an account?
an account is a record of increases and decreases in a specific asset, liability, equity, revenue,
or expense
What are the different types of financial statements?
, incomes statement, statement of retained earnings, balance sheet, statement of cash flows,
notes to the financial statements
What is an Income Statement?
includes revenues, expenses, and net income
The financial performance of a business
what is the equation for net income
Revenues - Expenses
What is a Statement of Retained Earnings?
money that us left over after paying for expenses/liabilities that is kept with the company
What is a Balance Sheet?
assets, liabilities, stockholders equity
The financial position of a business
What is a Statement of Cash Flows?
reports inflows and outflows of cash during the accounting period in the categories of
operating, investing, and financing
What is an operating activity?
daily activities of running a business (selling goods, paying employees)
what is investing activity
the purchasing or selling of a long term asset (land, building, copyright)
what is financing activity?
how a business raises money by not selling product (stocks)
