ACCT 201 ACTUAL 2026 STUDY GUIDE QUESTIONS AND
ANSWERS GRADED A+
✔✔The organization with primary authority for establishing accounting standards in the
United States is the ______. - ✔✔FASB
✔✔The people or businesses accountants provide information on are called _____
entities. - ✔✔reporting
✔✔Financing activities include ______. - ✔✔paying a dividend to stockholders,
repaying the principal on a loan,
issuing common stock
✔✔How does declaring and paying a cash dividend affect the accounting equation? -
✔✔Decreases stockholder's equity,
Decreases retained earnings
✔✔Reporting entities are ______. - ✔✔people or businesses
✔✔Stockholders' equity may be subdivided into additional elements called ______. -
✔✔retained earnings,
common stock
✔✔Which of the following statements are true? - ✔✔The increase in a business's
commitments to stockholders is called retained earnings.
Businesses may retain assets generated through operations.
✔✔Activities dealing with raising money to start a business are ______ activities. -
✔✔financing
✔✔Paying a cash dividend will cause the amount of cash ______, - ✔✔and the amount
of retained earnings to decrease
✔✔Borrowing money from creditors will cause the ______. - ✔✔right side of the
accounting equation to increase,
left side of the accounting equation to increase
✔✔The phrase "As of December 31, Year 1" would be used on which financial
statement(s)? - ✔✔Balance sheet only
✔✔The accounting records of Direct Marketing Company (DMC) indicate that the
company has $500 of cash; $3,500 of land; $1,000 of liabilities; $600 of common stock;
and $2,400 of retained earnings. Based on this information, the percent of assets
, provided by retained earnings is ______. - ✔✔60%, Total assets = $4,000 ($500 cash +
$3,500 Land). Retained earnings = 60% ($2,400 ÷ $4,000) of total assets.
✔✔Which of the following are operating activities? - ✔✔Cash receipts from customers
Paying expenses
Paying employees
✔✔Green Company has $10,000 of assets. Fifty percent of the assets were acquired
from the issue of common stock and thirty percent were acquired from earnings. Based
on this information, the dollar value of liabilities must be ______. - ✔✔$2,000
✔✔True or false: A company cannot pay dividends in excess of the amount of its
retained earnings. - ✔✔True: Dividends are a distribution of earnings. If there are no
earnings, there can be no dividends.
✔✔Activities dealing with purchasing and selling short-term assets are ______
activities. - ✔✔operating
✔✔Which of the following is a financing activity? - ✔✔Paying a dividend to stockholders
✔✔Compared to financial accounting information, managerial accounting information
______. - ✔✔contains more nonfinancial measures,
provides more detail about the everyday operations of a business
✔✔Which of the following is an operating activity? - ✔✔Selling services to customers
✔✔A business's commitment to owners is called ______. - ✔✔stockholders' equity
✔✔Companies typically report about events occurring over a span of time called
a(n)_____. - ✔✔accounting period
✔✔When a company pays cash to purchase land, total assets ______. - ✔✔are
unchanged
✔✔On the statement of cash flows, the amount of time an asset is held determines
whether it is classified as a(n) _____ or _____ activity. - ✔✔investing, operating
✔✔The information needs to external and internal users ______. - ✔✔frequently
overlap
✔✔On the statement of cash flows, the activities associated with conducting a business
are _____ activities. - ✔✔operating
ANSWERS GRADED A+
✔✔The organization with primary authority for establishing accounting standards in the
United States is the ______. - ✔✔FASB
✔✔The people or businesses accountants provide information on are called _____
entities. - ✔✔reporting
✔✔Financing activities include ______. - ✔✔paying a dividend to stockholders,
repaying the principal on a loan,
issuing common stock
✔✔How does declaring and paying a cash dividend affect the accounting equation? -
✔✔Decreases stockholder's equity,
Decreases retained earnings
✔✔Reporting entities are ______. - ✔✔people or businesses
✔✔Stockholders' equity may be subdivided into additional elements called ______. -
✔✔retained earnings,
common stock
✔✔Which of the following statements are true? - ✔✔The increase in a business's
commitments to stockholders is called retained earnings.
Businesses may retain assets generated through operations.
✔✔Activities dealing with raising money to start a business are ______ activities. -
✔✔financing
✔✔Paying a cash dividend will cause the amount of cash ______, - ✔✔and the amount
of retained earnings to decrease
✔✔Borrowing money from creditors will cause the ______. - ✔✔right side of the
accounting equation to increase,
left side of the accounting equation to increase
✔✔The phrase "As of December 31, Year 1" would be used on which financial
statement(s)? - ✔✔Balance sheet only
✔✔The accounting records of Direct Marketing Company (DMC) indicate that the
company has $500 of cash; $3,500 of land; $1,000 of liabilities; $600 of common stock;
and $2,400 of retained earnings. Based on this information, the percent of assets
, provided by retained earnings is ______. - ✔✔60%, Total assets = $4,000 ($500 cash +
$3,500 Land). Retained earnings = 60% ($2,400 ÷ $4,000) of total assets.
✔✔Which of the following are operating activities? - ✔✔Cash receipts from customers
Paying expenses
Paying employees
✔✔Green Company has $10,000 of assets. Fifty percent of the assets were acquired
from the issue of common stock and thirty percent were acquired from earnings. Based
on this information, the dollar value of liabilities must be ______. - ✔✔$2,000
✔✔True or false: A company cannot pay dividends in excess of the amount of its
retained earnings. - ✔✔True: Dividends are a distribution of earnings. If there are no
earnings, there can be no dividends.
✔✔Activities dealing with purchasing and selling short-term assets are ______
activities. - ✔✔operating
✔✔Which of the following is a financing activity? - ✔✔Paying a dividend to stockholders
✔✔Compared to financial accounting information, managerial accounting information
______. - ✔✔contains more nonfinancial measures,
provides more detail about the everyday operations of a business
✔✔Which of the following is an operating activity? - ✔✔Selling services to customers
✔✔A business's commitment to owners is called ______. - ✔✔stockholders' equity
✔✔Companies typically report about events occurring over a span of time called
a(n)_____. - ✔✔accounting period
✔✔When a company pays cash to purchase land, total assets ______. - ✔✔are
unchanged
✔✔On the statement of cash flows, the amount of time an asset is held determines
whether it is classified as a(n) _____ or _____ activity. - ✔✔investing, operating
✔✔The information needs to external and internal users ______. - ✔✔frequently
overlap
✔✔On the statement of cash flows, the activities associated with conducting a business
are _____ activities. - ✔✔operating
