ACCT 2000 LSU FINAL EXAM WITH COMPLETE SOLUTIONS
100% ACCURATE!!
What is the monetary unit assumption? - ANSWER Requires that only things that can
be expressed in money are included in the accounting records
What is the economic entity assumption? - ANSWER States that every economic entity
can be separately identified and accounted for
What is the periodicity assumption? - ANSWER States that the life of a business can be
divided into time periods
Sole proprietorship
Business organization form with simple control and tax advantages, but personal
liability.
Partnership
Business structure offering broader skills, tax advantages, but with personal liability.
Corporation
Business entity with easy transfer of ownership, ability to raise capital, no liability, and
double taxation.
Internal and external users
Categories of individuals or entities using financial information for decision-making.
Income statement
Financial statement showing a company's revenues and expenses over a specific
,period.
Retained Earnings Statement
Financial statement detailing changes in retained earnings over a period.
What is the going concern assumption? - ANSWER States that the business will remain
in operation for the whole sale future
What does accrual accounting mean? - ANSWER Transactions that can change a
company's financial statements are recorded in the periods in which the events
occurred
What is the full-disclosure principle? - ANSWER Indicates that companies disclose all
circumstances and events that would make a difference to financial statement users
What are some circumstances and events that investors would want disclosed? -
ANSWER -Pending lawsuits
-Significant transactions
-Results of operation
-Financial position
What does the cost principle require? - ANSWER Companies record assets at their
cost
What does the fair value principle state? - ANSWER Record assets and liabilities at fair
value
FASB requires most assets to be measured using the ____principle. - ANSWER Cost
Fair value principle only applies to. - ANSWER Assets that are actively traded such as
,investment securities
Balance sheet
Financial statement presenting a company's financial position at a specific point in time.
Statement of cash flow
Financial statement summarizing a company's cash inflows and outflows.
Current assets
Assets like cash, short-term investments, accounts receivable, inventory, supplies, and
prepaids.
Long-term investments
Assets not used in the business but held for long-term value.
Property, Plant and Equipment
Assets representing tangible resources like buildings, machinery, and equipment.
Intangibles
Assets lacking physical substance, such as patents or trademarks.
, Current Liabilities
Obligations due within a year, like accounts payable and short-term debt.
Long Term Liabilities
Debts due beyond a year, such as long-term loans.
Stockholders' Equity
Ownership interest in a corporation, including common stock and retained earnings.
Earnings Per Share
Calculation measuring a company's profitability by dividing net income by average
common shares outstanding.
Current Ratio
Liquidity ratio computed as current assets divided by current liabilities.
Debt to Total Assets
Solvency ratio formula = total liabilities / total assets.
GAAP
Generally Accepted Accounting Principles - rules for performing accounting in the US.
100% ACCURATE!!
What is the monetary unit assumption? - ANSWER Requires that only things that can
be expressed in money are included in the accounting records
What is the economic entity assumption? - ANSWER States that every economic entity
can be separately identified and accounted for
What is the periodicity assumption? - ANSWER States that the life of a business can be
divided into time periods
Sole proprietorship
Business organization form with simple control and tax advantages, but personal
liability.
Partnership
Business structure offering broader skills, tax advantages, but with personal liability.
Corporation
Business entity with easy transfer of ownership, ability to raise capital, no liability, and
double taxation.
Internal and external users
Categories of individuals or entities using financial information for decision-making.
Income statement
Financial statement showing a company's revenues and expenses over a specific
,period.
Retained Earnings Statement
Financial statement detailing changes in retained earnings over a period.
What is the going concern assumption? - ANSWER States that the business will remain
in operation for the whole sale future
What does accrual accounting mean? - ANSWER Transactions that can change a
company's financial statements are recorded in the periods in which the events
occurred
What is the full-disclosure principle? - ANSWER Indicates that companies disclose all
circumstances and events that would make a difference to financial statement users
What are some circumstances and events that investors would want disclosed? -
ANSWER -Pending lawsuits
-Significant transactions
-Results of operation
-Financial position
What does the cost principle require? - ANSWER Companies record assets at their
cost
What does the fair value principle state? - ANSWER Record assets and liabilities at fair
value
FASB requires most assets to be measured using the ____principle. - ANSWER Cost
Fair value principle only applies to. - ANSWER Assets that are actively traded such as
,investment securities
Balance sheet
Financial statement presenting a company's financial position at a specific point in time.
Statement of cash flow
Financial statement summarizing a company's cash inflows and outflows.
Current assets
Assets like cash, short-term investments, accounts receivable, inventory, supplies, and
prepaids.
Long-term investments
Assets not used in the business but held for long-term value.
Property, Plant and Equipment
Assets representing tangible resources like buildings, machinery, and equipment.
Intangibles
Assets lacking physical substance, such as patents or trademarks.
, Current Liabilities
Obligations due within a year, like accounts payable and short-term debt.
Long Term Liabilities
Debts due beyond a year, such as long-term loans.
Stockholders' Equity
Ownership interest in a corporation, including common stock and retained earnings.
Earnings Per Share
Calculation measuring a company's profitability by dividing net income by average
common shares outstanding.
Current Ratio
Liquidity ratio computed as current assets divided by current liabilities.
Debt to Total Assets
Solvency ratio formula = total liabilities / total assets.
GAAP
Generally Accepted Accounting Principles - rules for performing accounting in the US.
