acct 201 comprehensive final Exam Questions
and Correct Answers
1Q: A credit entry decreases ______ accounts and ______ liability accounts.
asset; increases
2.Q: Which categories of accounts have a normal debit balance?
Assets, Expenses, Dividends
3.Q: When a company pays off an account payable, what is debited and credited?
Debit Accounts Payable; Credit Cash
4.Q: Define expenses.
Costs incurred to generate revenue
5.Q: How do you calculate equity?
Assets − Liabilities
6.Q: What accounts are included in net income?
Revenues and Expenses
7.Q: When cash is received for services in advance, what is debited and credited?
Debit Cash; Credit Unearned Revenue
8.Q: What is a journal?
A record where transactions are first recorded
9.Q: How do you calculate net income?
Revenues − Expenses
, 10.Q: Adjusting entries affect one ______ account and one ______ account.
income statement; balance sheet
11.Q: What is accrual basis accounting?
Revenues/expenses recorded when earned/incurred, not when cash is exchanged
12.Q: Adjusting entry for accrued revenue — what is debited/credited?
Debit Asset; Credit Revenue
13.Q: Retained earnings formula (basic)?
Beginning RE + Net Income − Dividends
14.Q: Revenue recognition principle?
Record revenue when earned
15.Q: What is the time-period assumption?
Business activities are divided into specific time periods for reporting
16.Q: What are four types of adjusting entries?
Accrued revenues; accrued expenses; deferred revenues; deferred expenses
17.Q: In what order are financial statements prepared?
Income Statement; Retained Earnings; Balance Sheet; Cash Flow
18.Q: Why are closing entries made?
To reset temporary accounts to zero for the next period
19.Q: What is debited and credited when dividends are closed?
Debit Retained Earnings; Credit Dividends
and Correct Answers
1Q: A credit entry decreases ______ accounts and ______ liability accounts.
asset; increases
2.Q: Which categories of accounts have a normal debit balance?
Assets, Expenses, Dividends
3.Q: When a company pays off an account payable, what is debited and credited?
Debit Accounts Payable; Credit Cash
4.Q: Define expenses.
Costs incurred to generate revenue
5.Q: How do you calculate equity?
Assets − Liabilities
6.Q: What accounts are included in net income?
Revenues and Expenses
7.Q: When cash is received for services in advance, what is debited and credited?
Debit Cash; Credit Unearned Revenue
8.Q: What is a journal?
A record where transactions are first recorded
9.Q: How do you calculate net income?
Revenues − Expenses
, 10.Q: Adjusting entries affect one ______ account and one ______ account.
income statement; balance sheet
11.Q: What is accrual basis accounting?
Revenues/expenses recorded when earned/incurred, not when cash is exchanged
12.Q: Adjusting entry for accrued revenue — what is debited/credited?
Debit Asset; Credit Revenue
13.Q: Retained earnings formula (basic)?
Beginning RE + Net Income − Dividends
14.Q: Revenue recognition principle?
Record revenue when earned
15.Q: What is the time-period assumption?
Business activities are divided into specific time periods for reporting
16.Q: What are four types of adjusting entries?
Accrued revenues; accrued expenses; deferred revenues; deferred expenses
17.Q: In what order are financial statements prepared?
Income Statement; Retained Earnings; Balance Sheet; Cash Flow
18.Q: Why are closing entries made?
To reset temporary accounts to zero for the next period
19.Q: What is debited and credited when dividends are closed?
Debit Retained Earnings; Credit Dividends
