6/22/25, 5:31 AM PRAXIS 5101
PRAXIS 5101 (ECONOMICS\FINANCE) ACTUAL EXAM 2025
\UPDATED QUESTIONS AND CORRECT DETAILED
ANSWERS|COMPLETE EXAM 2025 \VERIFIED ANSWERS
\ALREADY GRADED A+
Something valuable that an entity owns, benefits from, or
Assets
has use of, in generating income.
Different types of assets Fixed, variable, intangible, tangible
Tangible assets used to generate profit and will not
examples of fixed assets be turned into cash within the year: "plant," land,
computer equipment, furniture, cars, buildings, and
equipment used to make products
What are variable assets May be transformed to cash sooner; inventory of product and
accounts receivable
What are intangible assets? Not physical-brand names, intellectual property- are high in
value
What is liquidity? How easy it is to turn an item into cash without losing any money
In business, it shows what the owner has contributed in
What is equity?
addition to retained earnings; ownership minus debts
What is depreciation? Loss of value for any reason.
the total amount of money being transferred into and
What is cash flow?
out of a business; revenues and/or expenses
Generally accepted accounting principles. A set of rules and
practices, having
What is GAAP? substantial authortitative support, that accounting
profession recognizes as a general guideline for a
financial reporting purposes; standardized how income
statements, balance sheets, and cash flow statements
are prepared
How is GAAP used for So investors understand what they are getting when they receive
investors? statements
Economic activity measurement, timing disclosures, and
What does GAAP
1/1
6
,6/22/25, 5:22 AM Praxis 5101
standardize/cover? how financial statements are prepared and presented.
Who requires GAAP? Companies regulated by the US Securities and Exchange
Commission (SEC)
Who issues GAAP through Financial Accounting Standards Board (FASB)
pronouncements?
Two major types of accounting Cash and accrual accounting
systems
Transactions are counted when money is actually
What does cash accounting
entail? received or the expenses are paid out.
Transactions are counted when orders are made or
What does accrual accounting
entail? delivered-even if no cash has been exchanged.
How does cash and accrual If an item is purchased in delivered in one month
accounting affects taxes? (accrual), but paid for in another month (cash), this
affects where it is recorded for tax purposes.
Cash accounting is more advantageous as it gives the
How does cash and accrual
business a better idea of cash on hand, but may not
accounting differ?
show correct profits; however, accrual accounting will
show
correct profits, but won't reflect actual cash flow.
Fundamental Accounting Assets = Liabilities + Owners' equity; this is the basis for the
Equation balance sheet
What is the accounting cycle? The accounting cycle describes the steps in the accounting
process.
What is the first step of the Collect and verify source documents: attain all source
accounting cycle? documents associated with financial transactions:
receipts, checks, and bank statements.
What is the second step in Analyze each transaction to see how the accounts will be
the accounting cycle? affected.
What is the third step in the Record transactions in journals
accounting cycle?
What is the fourth step in Prepare a trial balance
the accounting cycle?
What is the fifth step in the Prepare a worksheet: look for errors and make
accounting cycle? corrections called adjustments, which are tracked on a
worksheet.
What is the sixth step in the Adjust journal entries
accounting cycle?
2/16
, 6/22/25, 5:22 AM Praxis 5101
What is the seventh step in Prepare financial statements
the accounting cycle?
What is the eighth step in the Closing the books
accounting cycle?
When a transaction occurs, Journal
where is the first place it is
recorded?
The ledger contains different accounts like asset
What does the ledger
contain? accounts, revenue accounts, expense accounts,
liability accounts, and equity accounts.
2 types of ledgers General and subsidiary
The general ledger provides in a single location the
list of transactions affecting each account and the
What is a general ledger?
account's balance: A general ledger represents the
formal
ledger for a company's financial statements with debit
and credit account records validated by a trial balance.
The detail for a number of individual items that
What is a subsidiary ledger?
collectively make up a single general ledger account.
How do debits affect accounts Debits make assets and expense accounts go up and
in bookkeeping? income, liability, and equity accounts go down.
How do credits affect accounts Credits make liability, income, and equity accounts go
in bookkeeping? up and asset and expense accounts go down.
In double entry fundamental accounting equation (assets=liabilities + owner's
bookkeeping, what equity)
equation is used as the
basis?
Document showing the ending balances of ledger
What is a trial balance?
accounts, prior to final financial documents-if
accounts are off-balanced the company has
opportunity to adjust.
An employee earns $1615.64
$2,000 per month in gross
pay, buy pays $104.36 for
health
insurance, 9% in federal taxes,
3/16
PRAXIS 5101 (ECONOMICS\FINANCE) ACTUAL EXAM 2025
\UPDATED QUESTIONS AND CORRECT DETAILED
ANSWERS|COMPLETE EXAM 2025 \VERIFIED ANSWERS
\ALREADY GRADED A+
Something valuable that an entity owns, benefits from, or
Assets
has use of, in generating income.
Different types of assets Fixed, variable, intangible, tangible
Tangible assets used to generate profit and will not
examples of fixed assets be turned into cash within the year: "plant," land,
computer equipment, furniture, cars, buildings, and
equipment used to make products
What are variable assets May be transformed to cash sooner; inventory of product and
accounts receivable
What are intangible assets? Not physical-brand names, intellectual property- are high in
value
What is liquidity? How easy it is to turn an item into cash without losing any money
In business, it shows what the owner has contributed in
What is equity?
addition to retained earnings; ownership minus debts
What is depreciation? Loss of value for any reason.
the total amount of money being transferred into and
What is cash flow?
out of a business; revenues and/or expenses
Generally accepted accounting principles. A set of rules and
practices, having
What is GAAP? substantial authortitative support, that accounting
profession recognizes as a general guideline for a
financial reporting purposes; standardized how income
statements, balance sheets, and cash flow statements
are prepared
How is GAAP used for So investors understand what they are getting when they receive
investors? statements
Economic activity measurement, timing disclosures, and
What does GAAP
1/1
6
,6/22/25, 5:22 AM Praxis 5101
standardize/cover? how financial statements are prepared and presented.
Who requires GAAP? Companies regulated by the US Securities and Exchange
Commission (SEC)
Who issues GAAP through Financial Accounting Standards Board (FASB)
pronouncements?
Two major types of accounting Cash and accrual accounting
systems
Transactions are counted when money is actually
What does cash accounting
entail? received or the expenses are paid out.
Transactions are counted when orders are made or
What does accrual accounting
entail? delivered-even if no cash has been exchanged.
How does cash and accrual If an item is purchased in delivered in one month
accounting affects taxes? (accrual), but paid for in another month (cash), this
affects where it is recorded for tax purposes.
Cash accounting is more advantageous as it gives the
How does cash and accrual
business a better idea of cash on hand, but may not
accounting differ?
show correct profits; however, accrual accounting will
show
correct profits, but won't reflect actual cash flow.
Fundamental Accounting Assets = Liabilities + Owners' equity; this is the basis for the
Equation balance sheet
What is the accounting cycle? The accounting cycle describes the steps in the accounting
process.
What is the first step of the Collect and verify source documents: attain all source
accounting cycle? documents associated with financial transactions:
receipts, checks, and bank statements.
What is the second step in Analyze each transaction to see how the accounts will be
the accounting cycle? affected.
What is the third step in the Record transactions in journals
accounting cycle?
What is the fourth step in Prepare a trial balance
the accounting cycle?
What is the fifth step in the Prepare a worksheet: look for errors and make
accounting cycle? corrections called adjustments, which are tracked on a
worksheet.
What is the sixth step in the Adjust journal entries
accounting cycle?
2/16
, 6/22/25, 5:22 AM Praxis 5101
What is the seventh step in Prepare financial statements
the accounting cycle?
What is the eighth step in the Closing the books
accounting cycle?
When a transaction occurs, Journal
where is the first place it is
recorded?
The ledger contains different accounts like asset
What does the ledger
contain? accounts, revenue accounts, expense accounts,
liability accounts, and equity accounts.
2 types of ledgers General and subsidiary
The general ledger provides in a single location the
list of transactions affecting each account and the
What is a general ledger?
account's balance: A general ledger represents the
formal
ledger for a company's financial statements with debit
and credit account records validated by a trial balance.
The detail for a number of individual items that
What is a subsidiary ledger?
collectively make up a single general ledger account.
How do debits affect accounts Debits make assets and expense accounts go up and
in bookkeeping? income, liability, and equity accounts go down.
How do credits affect accounts Credits make liability, income, and equity accounts go
in bookkeeping? up and asset and expense accounts go down.
In double entry fundamental accounting equation (assets=liabilities + owner's
bookkeeping, what equity)
equation is used as the
basis?
Document showing the ending balances of ledger
What is a trial balance?
accounts, prior to final financial documents-if
accounts are off-balanced the company has
opportunity to adjust.
An employee earns $1615.64
$2,000 per month in gross
pay, buy pays $104.36 for
health
insurance, 9% in federal taxes,
3/16
