MGT 6201 ACCOUNTING EXAM
WITH VERIFIED QUESTIONS AND
CORRECT ANSWERS GRADED A+
Financial Accounting (what is it) - answer-Communicating the economic health of a
business to external users
Investors - answer-Use Information to decide whether to buy/sell stock (Risk vs. Return)
Creditors (Banks/Lendors) - answer-Use information to decide whether to lend money
GAAP - answer-Generally Accepted Accounting Principles: Rulebook companies in US
must follow
FASB - answer-(Financial Accounting Standards Board): Group that writes the GAAP
SEC - answer-(Securities and Exchange Commission): The "enforcer" that ensures
public companies follow the rules
The Balance Sheet (definition) - answer-Shows the financial position at a specific point
in time (snapshot) (e.g. "As of Dec 31, 2024")
Accounting Equation - answer-Assets = Liabilities + Stockholders' Equity (ALOE)
Assets - answer-Resources owned/controlled by company that will provide future
economic benefit (Cash, inventory, equipment)
Liabilities - answer-Claims by creditors; what you owe (Accounts Payable, Debt)
, Stockholders' Equity - answer-Claims by owners, what is left over after liabilities are
paid (Common Stock, Retained Earnings)
Income Statement (definition) - answer-Shows performance over a period of time (e.g.
"for the year ended Dec 21, 2024")
Income Statement Equation - answer-Net Income = Revenues - Operating Expenses -
Non-operating Expenses + Gains - Losses
Revenues - answer-Inflows from primary business activities (selling goods/services)
Expenses - answer-Costs incurred to generate revenues (COGS, Rent, Wages)
Gains/Losses - answer-From peripheral activities (i.e. selling a delivery truck)
Statement of Stockholders' Equity (definition) - answer-Shows changes in equity
accounts over a period
Contributed Capital - answer-Money Invested by owners (stock issuances)
Retained Earnings - answer-Cumulative Earnings kept in the business
Statement of Cash Flows (definition) - answer-Shows changes in cash over a period,
categorized by activity type
Operating Cash Flows - answer-Cash from day-to-day business (customers/suppliers)
Investing Cash Flows - answer-Cash from buying/selling long-term assets
(buildings/equipment)
WITH VERIFIED QUESTIONS AND
CORRECT ANSWERS GRADED A+
Financial Accounting (what is it) - answer-Communicating the economic health of a
business to external users
Investors - answer-Use Information to decide whether to buy/sell stock (Risk vs. Return)
Creditors (Banks/Lendors) - answer-Use information to decide whether to lend money
GAAP - answer-Generally Accepted Accounting Principles: Rulebook companies in US
must follow
FASB - answer-(Financial Accounting Standards Board): Group that writes the GAAP
SEC - answer-(Securities and Exchange Commission): The "enforcer" that ensures
public companies follow the rules
The Balance Sheet (definition) - answer-Shows the financial position at a specific point
in time (snapshot) (e.g. "As of Dec 31, 2024")
Accounting Equation - answer-Assets = Liabilities + Stockholders' Equity (ALOE)
Assets - answer-Resources owned/controlled by company that will provide future
economic benefit (Cash, inventory, equipment)
Liabilities - answer-Claims by creditors; what you owe (Accounts Payable, Debt)
, Stockholders' Equity - answer-Claims by owners, what is left over after liabilities are
paid (Common Stock, Retained Earnings)
Income Statement (definition) - answer-Shows performance over a period of time (e.g.
"for the year ended Dec 21, 2024")
Income Statement Equation - answer-Net Income = Revenues - Operating Expenses -
Non-operating Expenses + Gains - Losses
Revenues - answer-Inflows from primary business activities (selling goods/services)
Expenses - answer-Costs incurred to generate revenues (COGS, Rent, Wages)
Gains/Losses - answer-From peripheral activities (i.e. selling a delivery truck)
Statement of Stockholders' Equity (definition) - answer-Shows changes in equity
accounts over a period
Contributed Capital - answer-Money Invested by owners (stock issuances)
Retained Earnings - answer-Cumulative Earnings kept in the business
Statement of Cash Flows (definition) - answer-Shows changes in cash over a period,
categorized by activity type
Operating Cash Flows - answer-Cash from day-to-day business (customers/suppliers)
Investing Cash Flows - answer-Cash from buying/selling long-term assets
(buildings/equipment)
