FMAA ACCOUNTING PRINCIPLES EXAM 2025/2026 WITH
100% ACCURATE ANSWERS
1. If a company declares dividends of $10,000, how would this transaction
affect the financial statements?
It would increase revenue by $10,000 and decrease expenses.
It would increase total assets by $10,000 and decrease liabilities.
It would have no effect on the financial statements.
It would decrease retained earnings by $10,000 and increase the
Dividends account.
2. The debits and credits from the journal entries are posted to the general
ledger accounts only for:
adjusting entries and closing entries.
transactions occurring during the reporting period.
all journal entries.
closing entries.
3. Cost of goods sold. Choose the correct category
asset
stockholders' equity
liability
revenue
expense
,4. A company has a mortgage on its building in the amount of $78,000. On its
balance sheet, how would this mortgage be classified?
long-term liability
owners' equity
current liability
fixed asset
5. What is the total amount of sales revenue recognized by JK Industries from
the sale to Row Products?
$200,000
$400,000
$300,000
$100,000
6. The closing process involves:
reducing to zero the balance in each income statement account.
reducing the revenue accounts.
reducing the dividends account.
transferring to Retained Earnings the difference between total
revenues and total expenses.
all of the above
7. If the company later collects $15,600 from the customer, what additional
journal entry should be made to reflect this transaction?
Debit sales revenue $15,600, credit cash $15,600
, Debit cash $15,600, credit accounts receivable $15,600
Debit accounts receivable $15,600, credit cash $15,600
Debit cash $15,600, credit sales revenue $15,600
8. Describe the impact of declaring a cash dividend on the equity section of
the balance sheet.
Declaring a cash dividend increases liabilities without affecting
equity.
Declaring a cash dividend increases equity by the total amount of
the dividend declared.
Declaring a cash dividend decreases equity by the total amount of
the dividend declared.
Declaring a cash dividend has no effect on equity.
9. Describe the significance of preparing an unadjusted trial balance in the
accounting cycle.
The unadjusted trial balance is used to prepare financial statements
directly.
The unadjusted trial balance is the final step in the accounting cycle.
The unadjusted trial balance helps ensure that total debits equal
total credits before making adjustments.
The unadjusted trial balance is prepared after financial statements
are created.
10. What is the Accounting Equation?
Assets + Liabilities = Owners Equity
Assets - Liabilities = Retained Earnings
, Assets = Liabilities - Owners Equity
Assets = Liabilities + Owners Equity
11. After transactions are recorded in a journal ( journalized), they are:
Posted to the Chart of Accounts.
Posted to Facebook.
Posted to the General Ledger.
Posted to Source Documents.
Posted to the Statement of Cash Flows.
12. Why is cash received on a prior year's sale not included in the income
statement?
It is not recognized as it pertains to revenue from a previous
accounting period.
It is considered an expense for the current year.
It is included as part of selling expenses.
It is treated as an asset on the balance sheet.
13. Describe why the name of the company, the name of the financial
statement, and the statement date are essential components of financial
statements.
They are optional elements in financial statements.
They provide context and clarity about the financial information
presented.
They are irrelevant to the financial data.
100% ACCURATE ANSWERS
1. If a company declares dividends of $10,000, how would this transaction
affect the financial statements?
It would increase revenue by $10,000 and decrease expenses.
It would increase total assets by $10,000 and decrease liabilities.
It would have no effect on the financial statements.
It would decrease retained earnings by $10,000 and increase the
Dividends account.
2. The debits and credits from the journal entries are posted to the general
ledger accounts only for:
adjusting entries and closing entries.
transactions occurring during the reporting period.
all journal entries.
closing entries.
3. Cost of goods sold. Choose the correct category
asset
stockholders' equity
liability
revenue
expense
,4. A company has a mortgage on its building in the amount of $78,000. On its
balance sheet, how would this mortgage be classified?
long-term liability
owners' equity
current liability
fixed asset
5. What is the total amount of sales revenue recognized by JK Industries from
the sale to Row Products?
$200,000
$400,000
$300,000
$100,000
6. The closing process involves:
reducing to zero the balance in each income statement account.
reducing the revenue accounts.
reducing the dividends account.
transferring to Retained Earnings the difference between total
revenues and total expenses.
all of the above
7. If the company later collects $15,600 from the customer, what additional
journal entry should be made to reflect this transaction?
Debit sales revenue $15,600, credit cash $15,600
, Debit cash $15,600, credit accounts receivable $15,600
Debit accounts receivable $15,600, credit cash $15,600
Debit cash $15,600, credit sales revenue $15,600
8. Describe the impact of declaring a cash dividend on the equity section of
the balance sheet.
Declaring a cash dividend increases liabilities without affecting
equity.
Declaring a cash dividend increases equity by the total amount of
the dividend declared.
Declaring a cash dividend decreases equity by the total amount of
the dividend declared.
Declaring a cash dividend has no effect on equity.
9. Describe the significance of preparing an unadjusted trial balance in the
accounting cycle.
The unadjusted trial balance is used to prepare financial statements
directly.
The unadjusted trial balance is the final step in the accounting cycle.
The unadjusted trial balance helps ensure that total debits equal
total credits before making adjustments.
The unadjusted trial balance is prepared after financial statements
are created.
10. What is the Accounting Equation?
Assets + Liabilities = Owners Equity
Assets - Liabilities = Retained Earnings
, Assets = Liabilities - Owners Equity
Assets = Liabilities + Owners Equity
11. After transactions are recorded in a journal ( journalized), they are:
Posted to the Chart of Accounts.
Posted to Facebook.
Posted to the General Ledger.
Posted to Source Documents.
Posted to the Statement of Cash Flows.
12. Why is cash received on a prior year's sale not included in the income
statement?
It is not recognized as it pertains to revenue from a previous
accounting period.
It is considered an expense for the current year.
It is included as part of selling expenses.
It is treated as an asset on the balance sheet.
13. Describe why the name of the company, the name of the financial
statement, and the statement date are essential components of financial
statements.
They are optional elements in financial statements.
They provide context and clarity about the financial information
presented.
They are irrelevant to the financial data.
