PACE Exam Review
Financial Accounting - ANSused in preparing general purpose financial statements such as
income statements, retained earnings statements, balance sheets, and statement of cash flows
Income Statement - ANSreports a firms profitability for a period of time as measured by the
excess of revenues over expenses
Revenues - ANSincreases in net assets resulting from sales of goods or services
Expenses - ANScosts incurred to generate the revenues
Retained Earnings Statement - ANSreconciles the beginning balance of RE for the period to the
ending balance of RE for the period
Net Income ___ RE - ANSincreases
Net Loss ___ RE - ANSdecreases
Dividends ___ RE - ANSdecrease
Balance Sheet - ANSreports a firms assets, liabilities, and stockholders equity at a point in time
Assets - ANSmeasurable resources of a firm
Liabilities - ANSobligations owed by a firm to third parties
Stockholders Equity - ANSthe owners interest in the firm
Stockholders Equity is Comprised of ___ and ___ - ANScontributed capital
earnings retained in the firm
Statement of Cash Flows - ANSProvides a detailed analysis of the changes in cash during the
year
Transaction - ANSan observable and measurable exchange between two parties
Accounting Cycle - ANSa methodical way of recording and summarizing a firms transactions
and events for a period of time
Steps in the accounting cycle - ANS1) record transactions in a journal
2) post from the journal to the ledger
Financial Accounting - ANSused in preparing general purpose financial statements such as
income statements, retained earnings statements, balance sheets, and statement of cash flows
Income Statement - ANSreports a firms profitability for a period of time as measured by the
excess of revenues over expenses
Revenues - ANSincreases in net assets resulting from sales of goods or services
Expenses - ANScosts incurred to generate the revenues
Retained Earnings Statement - ANSreconciles the beginning balance of RE for the period to the
ending balance of RE for the period
Net Income ___ RE - ANSincreases
Net Loss ___ RE - ANSdecreases
Dividends ___ RE - ANSdecrease
Balance Sheet - ANSreports a firms assets, liabilities, and stockholders equity at a point in time
Assets - ANSmeasurable resources of a firm
Liabilities - ANSobligations owed by a firm to third parties
Stockholders Equity - ANSthe owners interest in the firm
Stockholders Equity is Comprised of ___ and ___ - ANScontributed capital
earnings retained in the firm
Statement of Cash Flows - ANSProvides a detailed analysis of the changes in cash during the
year
Transaction - ANSan observable and measurable exchange between two parties
Accounting Cycle - ANSa methodical way of recording and summarizing a firms transactions
and events for a period of time
Steps in the accounting cycle - ANS1) record transactions in a journal
2) post from the journal to the ledger
