Financial Accounting Final Exam With
Questions And Correct Answers
The cprimary cobjective cof cfinancial caccounting cis cto: c
A) cKnow cwhat, cwhen, cand chow cmuch cproduct cto cproduce.
B) cServe cthe cdecision-making cneeds cof cinternal cusers.
C) cProvide cinformation con cboth cthe ccosts cand cbenefits cof clooking cafter cproducts
cand cservices.
D) cProvide caccounting cinformation cthat cserves cexternal cusers.
E) cMonitor cand ccontrol ccompany cactivities. CORRECT ANSWER >>-✔✔D) cProvide
caccounting cinformation cthat cserves cexternal cusers.
The caccounting cconcept cthat crequires cfinancial cstatement cinformation cto cbe
csupported cby cindependent, cunbiased cevidence cis: c
A) cRevenue crecognition cprinciple.
B) cTime-period cassumption.
C) cObjectivity cprinciple.
D) cGoing-concern cassumption.
E) cBusiness centity cassumption. CORRECT ANSWER >>-✔✔C) cObjectivity cprinciple.
The caccounting cconcept cthat crequires cevery cbusiness cto cbe caccounted cfor
cseparately cfrom cother cbusiness centities, cincluding cits cowner cor cowners cis cknown
cas cthe: c
A) cTime-period cassumption.
B) cRevenue crecognition cprinciple.
C) cBusiness centity cassumption.
D) cCost cprinciple.
E) cGoing-concern cassumption. CORRECT ANSWER >>-✔✔C) cBusiness centity cassumption.
The caccounting cprinciple cthat crequires caccounting cinformation cto cbe cbased con
cactual ccost cand crequires cassets cand cservices cto cbe crecorded cinitially cat cthe ccash
cor ccash-equivalent camount cgiven cin cexchange, cis cthe: c
A) cGoing-concern cassumption.
,B) cCost cprinciple.
C) cRealization cprinciple.
D) cAccounting cequation.
E) cBusiness centity cassumption. CORRECT ANSWER >>-✔✔B) cCost cprinciple.
Revenues care: c
A) cThe ccosts cof cassets cor cservices cused.
B) cResources cowned cor ccontrolled cby ca ccompany.
C) cThe cincrease cin cequity cfrom ca ccompany's csales cof cproducts cand cservices.
D) cThe csame cas cnet cincome.
E) cThe cexcess cof cexpenses cover cassets. CORRECT ANSWER >>-✔✔C) cThe cincrease cin
cequity cfrom ca ccompany's csales cof cproducts cand cservices.
Distributions cof ccash cor cother cresources cby ca cbusiness cto cits cstockholders care
ccalled: c
A) cDividends.
B) cRetained cearnings.
C) cNet cIncome.
D) cExpenses.
E) cAssets. CORRECT ANSWER >>-✔✔A) cDividends.
A cfinancial cstatement cproviding cinformation cthat chelps cusers cunderstand ca
ccompany's cfinancial cstatus, cand cwhich clists cthe ctypes cand camounts cof cassets,
cliabilities, cand cequity cas cof ca cspecific cdate, cis ccalled ca(n): c
A) cStatement cof ccash cflows.
B) cFinancial cStatus cStatement.
C) cIncome cstatement.
D) cBalance csheet.
E) cStatement cof cretained cearnings. CORRECT ANSWER >>-✔✔D) cBalance csheet.
A cbusiness's crecord cof cthe cincreases cand cdecreases cin ca cspecific casset, cliability,
cequity, crevenue, cor cexpense cis cknown cas ca(n)
A) cAccount.
B) cPosting.
C) cChart cof caccounts.
D) cTrial cbalance.
E) cJournal. CORRECT ANSWER >>-✔✔A) cAccount.
Unearned crevenues care cgenerally: c
A) cRecorded cas can casset cin cthe caccounting crecords.
,B) cLiabilities ccreated cwhen ca ccustomer cpays cin cadvance cfor cproducts cor cservices
cbefore cthe crevenue cis cearned.
C) cRevenues cthat chave cbeen cearned cand creceived cin ccash.
D) cIncreases cto cstockholders cequity.
E) cRevenues cthat chave cbeen cearned cbut cnot cyet ccollected cin ccash. CORRECT ANSWER
>>-✔✔B) cLiabilities ccreated cwhen ca ccustomer cpays cin cadvance cfor cproducts cor
cservices cbefore cthe crevenue cis cearned.
A cdebit: c
A) cAlways cdecreases can caccount.
B) cIs cthe cright-hand cside cof ca cT-account.
C) cIs cnot cneed cto crecord ca ctransaction.
D) cAlways cincreases can caccount.
E) cIs cthe cleft-hand cside cof ca cT-account. CORRECT ANSWER >>-✔✔E) cIs cthe cleft-hand
cside cof ca cT-account.
A ccredit cis cused cto crecord can cincrease cin call cof cthe cfollowing caccounts cexcept: c
A) cService cRevenue
B) cWages cExpense
C) cCommon cStock
D) cAccounts cPayable
E) cUnearned cRevenue CORRECT ANSWER >>-✔✔B) cWages cExpense
A cdebit cis cused cto crecord cwhich cof cthe cfollowing? c
A) cAn cincrease cin ca ccontributed ccapital caccount.
B) cAn cincrease cin ca crevenue caccount.
C) cA cdecrease cin can cexpense caccount.
D) cA cdecrease cin can casset caccount.
E) cAn cincrease cin cthe cdividends caccount. CORRECT ANSWER >>-✔✔E) cAn cincrease cin
cthe cdividends caccount.
The cprocess cof ctransferring cgeneral cjournal centry cinformation cto cthe cledger cis
ccalled: c
A) cJournalizing.
B) cBalancing can caccount.
C) cDouble-entry caccounting.
D) cPosting.
E) cNot crequired cunless cdebits cdo cnot cequal ccredits. CORRECT ANSWER >>-✔✔D) cPosting.
When cclosing centries care cmade: c
A) cAll cpermanent caccounts care cclosed cbut cnominal caccounts care cnot cclosed.
, B) cAll cbalance csheet caccounts care cclosed.
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C) cAll cledger caccounts care cclosed cto cstart cthe cnew caccounting cperiod.
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D) cAll creal caccounts care cclosed cbut cnominal caccounts care cnot cclosed.
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E) cAll ctemporary caccounts care cclosed cbut cpermanent caccounts care cnot cclosed.
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RRECT ANSWER >>- ZI ZI
✔✔E) cAll ctemporary caccounts care cclosed cbut cpermanent caccounts care cnot cclosed.
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The cclosing cprocess cis cnecessary cin corder cto: c
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A) cEnsure cthat call cpermanent caccounts care cclosed cto czero cat cthe cend cof ceach ca
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ccounting cperiod. ZI
B) cCalculate cnet cincome cor cnet closs cfor can caccounting cperiod.
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C) cEnsure cthat cthe ccompany ccomplies cwith cstate claws.
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D) cEnsure cthat cnet cincome cor cnet closs cand cdividends cfor cthe cperiod care cclosed ci
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nto cthe cretained cearnings caccount.
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E) cEnsure cthat cmanagement cis caware cof chow cwell cthe ccompany cis coperating. COR
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RECT ANSWER >>- ZI ZI
✔✔D) cEnsure cthat cnet cincome cor cnet closs cand cdividends cfor cthe cperiod care cclose
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d cinto cthe cretained cearnings caccount.
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The cspecial caccount cused conly cin cthe cclosing cprocess cto ctemporarily chold cthe cam
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ounts cof crevenues cand cexpenses cbefore cthe cnet cdifference cis cadded cto c(or csubtra
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cted cfrom) cthe cretained cearnings caccount cis cthe: c
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A) cNominal caccount.
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B) cClosing caccount.
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C) cIncome cSummary caccount.
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D) cBalance ccolumn caccount.
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E) cContra caccount. CORRECT ANSWER >>-✔✔C) cIncome cSummary caccount.
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The cRetained cEarnings caccount chas ca ccredit cbalance cof c$37,000 cbefore cclosing ce
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ntries care cmade. cIf ctotal crevenues cfor cthe cperiod care c$55,200, ctotal cexpenses care
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c$39,800, cand cdividends care c$9,000, cwhat cis cthe cending cbalance cin cthe cRetained
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cEarnings caccount cafter call cclosing centries care cmade? c
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A) c$35,400. cB) c$37,000. cC) c$52,400. cD) c$28,000. cE) c$43,400.
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✔✔E) c$43,400. ZI
Which cof cthe cfollowing caccounts cshowing ca cbalance con cthe cpost-
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closing ctrial cbalance cindicate can cerror?
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A) cLand.
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B) cAccounts cPayable.
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C) cDividends.
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D) cUnearned cRevenue.
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E) cPrepaid cInsurance. CORRECT ANSWER >>-✔✔C) cDividends.
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Questions And Correct Answers
The cprimary cobjective cof cfinancial caccounting cis cto: c
A) cKnow cwhat, cwhen, cand chow cmuch cproduct cto cproduce.
B) cServe cthe cdecision-making cneeds cof cinternal cusers.
C) cProvide cinformation con cboth cthe ccosts cand cbenefits cof clooking cafter cproducts
cand cservices.
D) cProvide caccounting cinformation cthat cserves cexternal cusers.
E) cMonitor cand ccontrol ccompany cactivities. CORRECT ANSWER >>-✔✔D) cProvide
caccounting cinformation cthat cserves cexternal cusers.
The caccounting cconcept cthat crequires cfinancial cstatement cinformation cto cbe
csupported cby cindependent, cunbiased cevidence cis: c
A) cRevenue crecognition cprinciple.
B) cTime-period cassumption.
C) cObjectivity cprinciple.
D) cGoing-concern cassumption.
E) cBusiness centity cassumption. CORRECT ANSWER >>-✔✔C) cObjectivity cprinciple.
The caccounting cconcept cthat crequires cevery cbusiness cto cbe caccounted cfor
cseparately cfrom cother cbusiness centities, cincluding cits cowner cor cowners cis cknown
cas cthe: c
A) cTime-period cassumption.
B) cRevenue crecognition cprinciple.
C) cBusiness centity cassumption.
D) cCost cprinciple.
E) cGoing-concern cassumption. CORRECT ANSWER >>-✔✔C) cBusiness centity cassumption.
The caccounting cprinciple cthat crequires caccounting cinformation cto cbe cbased con
cactual ccost cand crequires cassets cand cservices cto cbe crecorded cinitially cat cthe ccash
cor ccash-equivalent camount cgiven cin cexchange, cis cthe: c
A) cGoing-concern cassumption.
,B) cCost cprinciple.
C) cRealization cprinciple.
D) cAccounting cequation.
E) cBusiness centity cassumption. CORRECT ANSWER >>-✔✔B) cCost cprinciple.
Revenues care: c
A) cThe ccosts cof cassets cor cservices cused.
B) cResources cowned cor ccontrolled cby ca ccompany.
C) cThe cincrease cin cequity cfrom ca ccompany's csales cof cproducts cand cservices.
D) cThe csame cas cnet cincome.
E) cThe cexcess cof cexpenses cover cassets. CORRECT ANSWER >>-✔✔C) cThe cincrease cin
cequity cfrom ca ccompany's csales cof cproducts cand cservices.
Distributions cof ccash cor cother cresources cby ca cbusiness cto cits cstockholders care
ccalled: c
A) cDividends.
B) cRetained cearnings.
C) cNet cIncome.
D) cExpenses.
E) cAssets. CORRECT ANSWER >>-✔✔A) cDividends.
A cfinancial cstatement cproviding cinformation cthat chelps cusers cunderstand ca
ccompany's cfinancial cstatus, cand cwhich clists cthe ctypes cand camounts cof cassets,
cliabilities, cand cequity cas cof ca cspecific cdate, cis ccalled ca(n): c
A) cStatement cof ccash cflows.
B) cFinancial cStatus cStatement.
C) cIncome cstatement.
D) cBalance csheet.
E) cStatement cof cretained cearnings. CORRECT ANSWER >>-✔✔D) cBalance csheet.
A cbusiness's crecord cof cthe cincreases cand cdecreases cin ca cspecific casset, cliability,
cequity, crevenue, cor cexpense cis cknown cas ca(n)
A) cAccount.
B) cPosting.
C) cChart cof caccounts.
D) cTrial cbalance.
E) cJournal. CORRECT ANSWER >>-✔✔A) cAccount.
Unearned crevenues care cgenerally: c
A) cRecorded cas can casset cin cthe caccounting crecords.
,B) cLiabilities ccreated cwhen ca ccustomer cpays cin cadvance cfor cproducts cor cservices
cbefore cthe crevenue cis cearned.
C) cRevenues cthat chave cbeen cearned cand creceived cin ccash.
D) cIncreases cto cstockholders cequity.
E) cRevenues cthat chave cbeen cearned cbut cnot cyet ccollected cin ccash. CORRECT ANSWER
>>-✔✔B) cLiabilities ccreated cwhen ca ccustomer cpays cin cadvance cfor cproducts cor
cservices cbefore cthe crevenue cis cearned.
A cdebit: c
A) cAlways cdecreases can caccount.
B) cIs cthe cright-hand cside cof ca cT-account.
C) cIs cnot cneed cto crecord ca ctransaction.
D) cAlways cincreases can caccount.
E) cIs cthe cleft-hand cside cof ca cT-account. CORRECT ANSWER >>-✔✔E) cIs cthe cleft-hand
cside cof ca cT-account.
A ccredit cis cused cto crecord can cincrease cin call cof cthe cfollowing caccounts cexcept: c
A) cService cRevenue
B) cWages cExpense
C) cCommon cStock
D) cAccounts cPayable
E) cUnearned cRevenue CORRECT ANSWER >>-✔✔B) cWages cExpense
A cdebit cis cused cto crecord cwhich cof cthe cfollowing? c
A) cAn cincrease cin ca ccontributed ccapital caccount.
B) cAn cincrease cin ca crevenue caccount.
C) cA cdecrease cin can cexpense caccount.
D) cA cdecrease cin can casset caccount.
E) cAn cincrease cin cthe cdividends caccount. CORRECT ANSWER >>-✔✔E) cAn cincrease cin
cthe cdividends caccount.
The cprocess cof ctransferring cgeneral cjournal centry cinformation cto cthe cledger cis
ccalled: c
A) cJournalizing.
B) cBalancing can caccount.
C) cDouble-entry caccounting.
D) cPosting.
E) cNot crequired cunless cdebits cdo cnot cequal ccredits. CORRECT ANSWER >>-✔✔D) cPosting.
When cclosing centries care cmade: c
A) cAll cpermanent caccounts care cclosed cbut cnominal caccounts care cnot cclosed.
, B) cAll cbalance csheet caccounts care cclosed.
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C) cAll cledger caccounts care cclosed cto cstart cthe cnew caccounting cperiod.
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D) cAll creal caccounts care cclosed cbut cnominal caccounts care cnot cclosed.
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E) cAll ctemporary caccounts care cclosed cbut cpermanent caccounts care cnot cclosed.
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RRECT ANSWER >>- ZI ZI
✔✔E) cAll ctemporary caccounts care cclosed cbut cpermanent caccounts care cnot cclosed.
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The cclosing cprocess cis cnecessary cin corder cto: c
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A) cEnsure cthat call cpermanent caccounts care cclosed cto czero cat cthe cend cof ceach ca
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ccounting cperiod. ZI
B) cCalculate cnet cincome cor cnet closs cfor can caccounting cperiod.
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C) cEnsure cthat cthe ccompany ccomplies cwith cstate claws.
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D) cEnsure cthat cnet cincome cor cnet closs cand cdividends cfor cthe cperiod care cclosed ci
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nto cthe cretained cearnings caccount.
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E) cEnsure cthat cmanagement cis caware cof chow cwell cthe ccompany cis coperating. COR
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RECT ANSWER >>- ZI ZI
✔✔D) cEnsure cthat cnet cincome cor cnet closs cand cdividends cfor cthe cperiod care cclose
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d cinto cthe cretained cearnings caccount.
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The cspecial caccount cused conly cin cthe cclosing cprocess cto ctemporarily chold cthe cam
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ounts cof crevenues cand cexpenses cbefore cthe cnet cdifference cis cadded cto c(or csubtra
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cted cfrom) cthe cretained cearnings caccount cis cthe: c
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A) cNominal caccount.
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B) cClosing caccount.
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C) cIncome cSummary caccount.
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D) cBalance ccolumn caccount.
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E) cContra caccount. CORRECT ANSWER >>-✔✔C) cIncome cSummary caccount.
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The cRetained cEarnings caccount chas ca ccredit cbalance cof c$37,000 cbefore cclosing ce
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ntries care cmade. cIf ctotal crevenues cfor cthe cperiod care c$55,200, ctotal cexpenses care
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c$39,800, cand cdividends care c$9,000, cwhat cis cthe cending cbalance cin cthe cRetained
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cEarnings caccount cafter call cclosing centries care cmade? c
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A) c$35,400. cB) c$37,000. cC) c$52,400. cD) c$28,000. cE) c$43,400.
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✔✔E) c$43,400. ZI
Which cof cthe cfollowing caccounts cshowing ca cbalance con cthe cpost-
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closing ctrial cbalance cindicate can cerror?
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A) cLand.
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B) cAccounts cPayable.
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C) cDividends.
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D) cUnearned cRevenue.
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E) cPrepaid cInsurance. CORRECT ANSWER >>-✔✔C) cDividends.
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