ACC 131 - EXAM 1 - MITCHELL UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

ACC 131 - EXAM 1 - MITCHELL UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS

Question:
1. Fundamental Accounting Equation
Answer:
Assets = Liabilities + Stockholders' Equity

Question:
2. Expanded Accounting Equation
Answer:
Assets = Liabilities + Revenues + Stock + Beg RE - Expenses - Dividends

Question:
3. Asset
Answer:
economic resources of a company

Question:
4. Liability
Answer:
obligation that a company is required to fulfill

Question:
5. Revenue
Answer:
increase in assets that result from the sale of a product or service

Question:
6. Expense
Answer:
cost of resources used to earn revenues during a period

Question:
7. Stock
Answer:
partial ownership of a company earned by paying cash

Question:
8. Retained Earnings
Answer:
accumulated net income of a company that has not been distributed to owners as net income

Question:
9. Format of Multi-Step Income Statement

, Answer:
Title: Company, Statement Title, For Year Ended (Date)
Sales Revenue COGS Gross Margin
Operating Expenses Operating Income
Other Revenues/Gains Other Expenses/Losses
Income Before Income Taxes Income Tax
Net Income

Question:
10. Examples of operating expenses, other revenues/gains, other expenses/losses
Answer:
Operating expenses - depreciation, salaries expense, supplies expense
Other Rev/Gains - Interest Rev, Gain on PPE
Other Exp/Losses - Interest Exp, Loss on PPE

Question:
11. Format of Retained Earnings Statement
Answer:
Title - Company, Statement Title, For Year Ended (Date)
Beginning Retained Earnings, Add: Net Income, Less: Dividends, Ending Retained Earnings

Question:
12. Format of Classified Balance Sheet
Answer:
ASSETS (Current, Noncurrent, PPE, intangible) Total Assets
LIABILITIES (Current, Long-Term) Total Liabilities
STOCKHOLDERS' EQUITY (Retained Earnings, Capital) Total SE Total Liabilities and SE (should =
Total Assets)

Question:
13. Examples of current assets, PPE accounts, current liabilities, and long-term liabilities
Answer:
Current assets - cash, accounts receivable, supplies, inventory, prepaid expenses
PPE Accounts - land, buildings, equipment, depreciation on any of those accounts
Current Liabilities - accounts payable, salaries payable Long-Term Liabilities - bonds payable

Question:
14. Where do debits/credits go, what accounts have which normal balances?
Answer:
Debits - go on the left; expenses, assets, and dividends have normal debit balances
Credits - go on the right; revenues, liabilities, and stock have normal credit balances

Question:
15. Revenue Recognition and Expense Recognition