FUNDAMENTAL ACCOUNTING
PRINCIPLES UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● Accounting equation
Answer: Assets = Liabilities + Equity (balance sheet equation)
●● Assets
Answer: Resources a business owns or controls.
●● Audit
Answer: Analysis and report of an organization's accounting system, its
records, and its reports using various tests.
●● Auditor
Answer: Individuals hired to review financial reports and information
systems.
●● Balance sheet
Answer: Financial statement that lists types and dollar amounts of assets,
liabilities, and equity at a specific date.
, ●● Business entity assumption
Answer: Principle that requires a business to be accounted for separately
from its owner and from any other entity.
●● Common stock
Answer: Corporation's basic ownership share (capital stock)
●● Conceptual framework
Answer: The basic concepts that underlie the preparation and
presentation of financial statements for external users.
●● Corporation
Answer: Business that is a separate legal entity under state or federal
laws with owners called shareholders or stockholders.
●● Cost-benefit constraint
Answer: The notion that the benefit of a disclosure exceeds the cost of
that disclosure.
●● Cost principle
Answer: Prescribes financial statement information to be based on actual
costs incurred in business transactions.
PRINCIPLES UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● Accounting equation
Answer: Assets = Liabilities + Equity (balance sheet equation)
●● Assets
Answer: Resources a business owns or controls.
●● Audit
Answer: Analysis and report of an organization's accounting system, its
records, and its reports using various tests.
●● Auditor
Answer: Individuals hired to review financial reports and information
systems.
●● Balance sheet
Answer: Financial statement that lists types and dollar amounts of assets,
liabilities, and equity at a specific date.
, ●● Business entity assumption
Answer: Principle that requires a business to be accounted for separately
from its owner and from any other entity.
●● Common stock
Answer: Corporation's basic ownership share (capital stock)
●● Conceptual framework
Answer: The basic concepts that underlie the preparation and
presentation of financial statements for external users.
●● Corporation
Answer: Business that is a separate legal entity under state or federal
laws with owners called shareholders or stockholders.
●● Cost-benefit constraint
Answer: The notion that the benefit of a disclosure exceeds the cost of
that disclosure.
●● Cost principle
Answer: Prescribes financial statement information to be based on actual
costs incurred in business transactions.
