A304 Final Exam Questions and All
Correct Answers 2025-2026 Updated.
2 primary functions of financial accounting - Answer 1. measure business activities of a
company
2. communicate information about those activities to investors and creditors and other outside
users for decision making purposes
who has claims to a company's resources? - Answer investors and creditors
corporation - Answer company legally separate from its owners
- advantage is limited liability from stockholders being held responsible for financial obligations
of a company
- disadvantage is double taxation
Sole Proprietorship - Answer A business owned by one person
partnership - Answer business owned by 2 or more people
capital markets - Answer all investors and creditors who provide funds to businesses who need
them
usefulness of financial statements - Answer - assessing prospect of future cash flows
- estimating firm value
- identifying red flags
- evaluating risks and uncertainties
-assessing credit risk
- evaluating management
what info best explains a company's stock price performance? - Answer net income
what is important indicator of management's ability to respond to business situations and
, - authority
FASB - Answer has responsibility for setting accounting standards to the private sector
- delegated responsbility
sarbanes-oxley act - Answer provides for the regulation of auditors and the types of services
they furnish to clients, increases accountability of corporate executives, addresses conflicts of
interest, provides criminal penalties for violators
balance sheet - Answer reports balance of assets, liab, SE, at a point in time
operating cycle - Answer period of time from the purchase of inventory until the time the
company collects cash from a customer from the sale of inventory
how are current assets listed on BS - Answer in order of liquidity
cash equivalent - Answer short-term investments with original maturities of less than 90 days
- can be converted to cash easily
current inventory - Answer - cash/cash equivalent
- accounts receivables
- inventory
- prepaid expenses
long-term assets - Answer - long term investments
- PPE
- operating leases
- intangible assets
- others
depreciation - Answer writing off a portion of the asset's original cost in each year the asset
was used
Correct Answers 2025-2026 Updated.
2 primary functions of financial accounting - Answer 1. measure business activities of a
company
2. communicate information about those activities to investors and creditors and other outside
users for decision making purposes
who has claims to a company's resources? - Answer investors and creditors
corporation - Answer company legally separate from its owners
- advantage is limited liability from stockholders being held responsible for financial obligations
of a company
- disadvantage is double taxation
Sole Proprietorship - Answer A business owned by one person
partnership - Answer business owned by 2 or more people
capital markets - Answer all investors and creditors who provide funds to businesses who need
them
usefulness of financial statements - Answer - assessing prospect of future cash flows
- estimating firm value
- identifying red flags
- evaluating risks and uncertainties
-assessing credit risk
- evaluating management
what info best explains a company's stock price performance? - Answer net income
what is important indicator of management's ability to respond to business situations and
, - authority
FASB - Answer has responsibility for setting accounting standards to the private sector
- delegated responsbility
sarbanes-oxley act - Answer provides for the regulation of auditors and the types of services
they furnish to clients, increases accountability of corporate executives, addresses conflicts of
interest, provides criminal penalties for violators
balance sheet - Answer reports balance of assets, liab, SE, at a point in time
operating cycle - Answer period of time from the purchase of inventory until the time the
company collects cash from a customer from the sale of inventory
how are current assets listed on BS - Answer in order of liquidity
cash equivalent - Answer short-term investments with original maturities of less than 90 days
- can be converted to cash easily
current inventory - Answer - cash/cash equivalent
- accounts receivables
- inventory
- prepaid expenses
long-term assets - Answer - long term investments
- PPE
- operating leases
- intangible assets
- others
depreciation - Answer writing off a portion of the asset's original cost in each year the asset
was used
