ACC 231 EXAM PRACTICE SOLUTION EXAM
2026
◉ What is accounting Answer: The process of recognizing,
measuring, recording and reporting information about business
transactions.
◉ Accounting Must: Answer: *Recognize business transactions
*Measures business transactions
*Record business transaction
*Report business transactions over a period of time
◉ What is the Cost Principle? Answer: This principle states that
when a business acquires assets or services, they should be
recorded at their actual cost, also called historical cost. In other
words, the amount paid for the asset or services is the amount
recorded as its value.
◉ What are Business Transactions? And why are they important?
Answer: Capturing the financial impact of events on the entity in
order to generate financial statements at the end of each period. Its
important because it helps evaluates performance and its used as a
tool to make financial decisions.
, ◉ Generally Accepted Accounting Principles (GAAP) Answer: The
rules, principles, and concepts established by the accounting
profession that govern financial accounting.
◉ Financial Accounting Standards Board (FASB) Answer: In the US,
most GAAP is developed by FASB. FASB is seven-person group
primarily responsible for the establishment of GAAP.
◉ International Financial Reporting Standards (IFRS) Answer: Many
countries that have their own accounting standards have started to
allow the use of IFRS in addition to or instead of their own
standards. The US focuses on GAAP
◉ Business Answer: A business is a legal organization that attempts
to create value by exchanging products with costumers for money
◉ A business must have three elements: Answer: 1. Businesses are
legal entities
2. A business must exchange a product
a. Goods
b. Services
3.Businesses create value
2026
◉ What is accounting Answer: The process of recognizing,
measuring, recording and reporting information about business
transactions.
◉ Accounting Must: Answer: *Recognize business transactions
*Measures business transactions
*Record business transaction
*Report business transactions over a period of time
◉ What is the Cost Principle? Answer: This principle states that
when a business acquires assets or services, they should be
recorded at their actual cost, also called historical cost. In other
words, the amount paid for the asset or services is the amount
recorded as its value.
◉ What are Business Transactions? And why are they important?
Answer: Capturing the financial impact of events on the entity in
order to generate financial statements at the end of each period. Its
important because it helps evaluates performance and its used as a
tool to make financial decisions.
, ◉ Generally Accepted Accounting Principles (GAAP) Answer: The
rules, principles, and concepts established by the accounting
profession that govern financial accounting.
◉ Financial Accounting Standards Board (FASB) Answer: In the US,
most GAAP is developed by FASB. FASB is seven-person group
primarily responsible for the establishment of GAAP.
◉ International Financial Reporting Standards (IFRS) Answer: Many
countries that have their own accounting standards have started to
allow the use of IFRS in addition to or instead of their own
standards. The US focuses on GAAP
◉ Business Answer: A business is a legal organization that attempts
to create value by exchanging products with costumers for money
◉ A business must have three elements: Answer: 1. Businesses are
legal entities
2. A business must exchange a product
a. Goods
b. Services
3.Businesses create value
