acct 201 final Exam 1 Questions and Correct Answers

acct 201 final Exam 1 Questions and Correct
Answers
What is the primary purpose of accounting?

Provide financial information (B)

Which group uses accounting information to make investment decisions?

Investors (B)

A reporting entity is:

A business unit with financial statements (B)

Which of the following best describes owner's equity?

Owner's claim on assets (C)

The accounting equation is:

Assets = Liabilities + Equity (B)

Which is an asset?

Cash (B)

Paying cash for rent:

Decreases assets and equity (B)

Borrowing money affects:

Liabilities and assets (B)

Net income is calculated as:

Revenue - Expenses (C)

, Which statement shows financial position at a point in time?

Balance sheet (B)

Which financial statement reports revenues and expenses over a period of time?

Income statement (B)

Accounts receivable is:

An asset (B)

Accounts payable is:

Liability (C)

Accrual accounting recognizes revenue when:

Earned (B)

Accrued expense means:

Incurred but unpaid (C)

What is the purpose of adjusting entries?

Ensure revenues and expenses are recognized properly (C)

Supplies used are recorded as:

Expense (B)

Prepaid rent is initially recorded as:

Asset (C)

Unearned revenue is:

Liability (C)