Accy 201 Exam #1 || WITH A+ GRADED SOLUTIONS!!
Generally accepted accounting principles (GAAP) correct answers a set of rules financial
accounting is governed by
Generally accepted accounting principles (GAAP) identify three major characteristics of
information: correct answers 1. Relevant- impacts the decision of the informed user for
financial information.
2. Reliable.
3. Comparability- helps us compare financial information from one period with that of the
next period.
Assets correct answers resources owned or controlled by a company.
Asset Accounts Include (8): correct answers -cash
-accounts receivable (amounts owed to the company by customers)
-notes receivable
-prepaid accounts (also called prepaid expenses)
-supplies
-equipment
-buildings
-land
Liabilities correct answers -is a claim against assets, which means that the business is
obligated to transfer assets or provide products or services to others to satisfy the debt.
-represent the claims of creditors on the entity's assets.
Trial Balance: correct answers lists all account balances in the general ledger. If the books are
in balance, the total debits will equal the total credits.
Trail balance organization correct answers Assets- most liquidable
Liabilities
Equity
----> income statement
Income Statement correct answers Revenues : Accounts- CR
Totals- DR
Expenses: Accounts- CR
Totals- DR
Net Income (= Revenues- Expenses) DR
Statement of Retained earnings correct answers Beg Retained earnings:
Plus: Net Income (from Inc. Statement)
Less: Cash Dividends
End Retained earnings:
Balance Sheet correct answers Assets Liabilities
Accounts Acc.
Total Total
Equity
, C. stock
R. Eanrings
Total Liab and Equity
Liability Accounts Include: correct answers -accounts payable (amounts we owe to creditors
for assets purchased on account)
-notes payable
-unearned revenue (cash has been received but the product or service has not been delivered)
-accrued liabilities
Equity correct answers owner's claim on assets.
investments by owners, contributed capital, payments to those owners (dividends).
-retained earnings represents all of the accumulated earnings of a corporation that have not
been distributed to shareholders.
Equity Accounts Include: correct answers -common stock
-retained earnings
-dividends
-expenses
-revenues
Revenue recognition principle correct answers provides guidance on when a company must
recognize revenue.
Matching principle (expense recognition) correct answers prescribes that a company must
record its expenses incurred to generate the revenue.
Full disclosure principle correct answers requires a company to report the details behind
financial statements that would impact users' decisions.
Going-concern assumption correct answers means that accounting information reflects a
presumption the business will continue operating.
Monetary unit assumption correct answers means we can express transactions in money.
Time period assumption correct answers presumes that the life of a company can be divided
into time periods, such as months and years.
Business entity assumption correct answers means that a business is accounted for separately
from its owner or other business entities.
Accounting Process Steps: correct answers 1. analyze source documents to identify business
transactions.
2. record it in a journal.
3. transactions in the journal are posted to a ledger accounts.
4. prepare a trial balance.
Trial balance correct answers a listing of all account balances to make sure that all
information has been transferred properly.
Generally accepted accounting principles (GAAP) correct answers a set of rules financial
accounting is governed by
Generally accepted accounting principles (GAAP) identify three major characteristics of
information: correct answers 1. Relevant- impacts the decision of the informed user for
financial information.
2. Reliable.
3. Comparability- helps us compare financial information from one period with that of the
next period.
Assets correct answers resources owned or controlled by a company.
Asset Accounts Include (8): correct answers -cash
-accounts receivable (amounts owed to the company by customers)
-notes receivable
-prepaid accounts (also called prepaid expenses)
-supplies
-equipment
-buildings
-land
Liabilities correct answers -is a claim against assets, which means that the business is
obligated to transfer assets or provide products or services to others to satisfy the debt.
-represent the claims of creditors on the entity's assets.
Trial Balance: correct answers lists all account balances in the general ledger. If the books are
in balance, the total debits will equal the total credits.
Trail balance organization correct answers Assets- most liquidable
Liabilities
Equity
----> income statement
Income Statement correct answers Revenues : Accounts- CR
Totals- DR
Expenses: Accounts- CR
Totals- DR
Net Income (= Revenues- Expenses) DR
Statement of Retained earnings correct answers Beg Retained earnings:
Plus: Net Income (from Inc. Statement)
Less: Cash Dividends
End Retained earnings:
Balance Sheet correct answers Assets Liabilities
Accounts Acc.
Total Total
Equity
, C. stock
R. Eanrings
Total Liab and Equity
Liability Accounts Include: correct answers -accounts payable (amounts we owe to creditors
for assets purchased on account)
-notes payable
-unearned revenue (cash has been received but the product or service has not been delivered)
-accrued liabilities
Equity correct answers owner's claim on assets.
investments by owners, contributed capital, payments to those owners (dividends).
-retained earnings represents all of the accumulated earnings of a corporation that have not
been distributed to shareholders.
Equity Accounts Include: correct answers -common stock
-retained earnings
-dividends
-expenses
-revenues
Revenue recognition principle correct answers provides guidance on when a company must
recognize revenue.
Matching principle (expense recognition) correct answers prescribes that a company must
record its expenses incurred to generate the revenue.
Full disclosure principle correct answers requires a company to report the details behind
financial statements that would impact users' decisions.
Going-concern assumption correct answers means that accounting information reflects a
presumption the business will continue operating.
Monetary unit assumption correct answers means we can express transactions in money.
Time period assumption correct answers presumes that the life of a company can be divided
into time periods, such as months and years.
Business entity assumption correct answers means that a business is accounted for separately
from its owner or other business entities.
Accounting Process Steps: correct answers 1. analyze source documents to identify business
transactions.
2. record it in a journal.
3. transactions in the journal are posted to a ledger accounts.
4. prepare a trial balance.
Trial balance correct answers a listing of all account balances to make sure that all
information has been transferred properly.
