ACC 101 Exam queries with answers
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What is the primary responsibility of FASB? - ANS✅✅Developing GAAP
What is the accounting equation? - ANS✅✅Assets=Liability+Equity
What is the definition of revenue? - ANS✅✅Money earned from providing a product or service
Is CoGS an expense? - ANS✅✅Yes
What is the primary objective of financial reporting? - ANS✅✅To provide info for decision making
What accounts are on the balance sheet? - ANS✅✅Assets, liabilities, equity
What accounts are on the income statement? - ANS✅✅Revenues, expenses
How does purchasing equipment on credit affect the Accounting Equation? - ANS✅✅Assets
increase, liabilities increase
What is the normal balance for assets, liabilities, revenues, and expenses? - ANS✅✅Debit, credit,
credit, credit
What is the definition of journalizing? - ANS✅✅Recording transactions
What is a trial balance? - ANS✅✅A statement that lists company's accounts with ending balances
What is the order of accounts on a trial balance? - ANS✅✅Assets, liabilities, common stock,
dividends, revenue, expenses
When are revenue and expenses recognized in accrual accounting? - ANS✅✅When earned and
when incurred
, What is the adjusting entry for accrued wages? - ANS✅✅salaries expense/salaries payable
Closing entries - ANS✅✅Set to 0 at the end of each year and balances are transferred to retained
earnings
What is the equation for gross profit? - ANS✅✅Gross profit=Net Sales-CoGS
What is the equation for net sales? - ANS✅✅Net sales=Sales-sales returns and allowances
What is the equation for net income? - ANS✅✅Net income=Sales-All expenses
What does "2/10, n/30" mean? - ANS✅✅2 percent discount if paid in full within 10 days
Ending Inventory=? - ANS✅✅Beginning inventory+purchases-CoGS
What type of account is inventory? - ANS✅✅Asset
What happens to inventory when it is sold? - ANS✅✅It becomes an expense
What does FOB shipping point mean? - ANS✅✅Ownership transfers at shipping point
What does FOB destination mean? - ANS✅✅Ownership transfers upon arrival at destination
If FIFO is used, ending inventory= - ANS✅✅Newest items
If LIFO is used, ending inventory= - ANS✅✅Oldest items
What inventory method would result is lower net income during a period of rising prices? -
ANS✅✅LIFO
What type of goods use the Specific Identification inventory method? - ANS✅✅Expensive items
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What is the primary responsibility of FASB? - ANS✅✅Developing GAAP
What is the accounting equation? - ANS✅✅Assets=Liability+Equity
What is the definition of revenue? - ANS✅✅Money earned from providing a product or service
Is CoGS an expense? - ANS✅✅Yes
What is the primary objective of financial reporting? - ANS✅✅To provide info for decision making
What accounts are on the balance sheet? - ANS✅✅Assets, liabilities, equity
What accounts are on the income statement? - ANS✅✅Revenues, expenses
How does purchasing equipment on credit affect the Accounting Equation? - ANS✅✅Assets
increase, liabilities increase
What is the normal balance for assets, liabilities, revenues, and expenses? - ANS✅✅Debit, credit,
credit, credit
What is the definition of journalizing? - ANS✅✅Recording transactions
What is a trial balance? - ANS✅✅A statement that lists company's accounts with ending balances
What is the order of accounts on a trial balance? - ANS✅✅Assets, liabilities, common stock,
dividends, revenue, expenses
When are revenue and expenses recognized in accrual accounting? - ANS✅✅When earned and
when incurred
, What is the adjusting entry for accrued wages? - ANS✅✅salaries expense/salaries payable
Closing entries - ANS✅✅Set to 0 at the end of each year and balances are transferred to retained
earnings
What is the equation for gross profit? - ANS✅✅Gross profit=Net Sales-CoGS
What is the equation for net sales? - ANS✅✅Net sales=Sales-sales returns and allowances
What is the equation for net income? - ANS✅✅Net income=Sales-All expenses
What does "2/10, n/30" mean? - ANS✅✅2 percent discount if paid in full within 10 days
Ending Inventory=? - ANS✅✅Beginning inventory+purchases-CoGS
What type of account is inventory? - ANS✅✅Asset
What happens to inventory when it is sold? - ANS✅✅It becomes an expense
What does FOB shipping point mean? - ANS✅✅Ownership transfers at shipping point
What does FOB destination mean? - ANS✅✅Ownership transfers upon arrival at destination
If FIFO is used, ending inventory= - ANS✅✅Newest items
If LIFO is used, ending inventory= - ANS✅✅Oldest items
What inventory method would result is lower net income during a period of rising prices? -
ANS✅✅LIFO
What type of goods use the Specific Identification inventory method? - ANS✅✅Expensive items
