ACCT 2101 Final Exam QUESTIONS
WITH CORRECT ANSWERS
Authorized Stock - ANS ✔✔The amount of stock that a corporation is authorized to sell as
indicated by its charter.
Issued Stock - ANS ✔✔Outstanding + Treasury stock
Outstanding Stock - ANS ✔✔Capital stock that has been issued and is being held by
stockholders.
Treasury Stock - ANS ✔✔A corporations own stock that has been reacquried by the corporation
and is being held for future use.
4 Financial Statements (in order) - ANS ✔✔Income Statement, Retained Earnings Statement,
Balance Sheet, Statement of Cash Flows
Purpose of Income Statement - ANS ✔✔To show how successfully your business performed in a
period (profitability)
Purpose of Retained Earning Statement - ANS ✔✔To indicate how much of previous income was
distributed to you and other owners of your business in the form of dividends, and how much
was retained in the business to allow for future growth
Purpose of Balance Sheet - ANS ✔✔To present a picture at a point in tome of what your
business owns (assets) and what it owes (liabilities).
, Purpose of Statement of Cash Flows - ANS ✔✔To provide primary information about cash
receipts (inflows) and cash payments (outflows) from operating, investing, and financing
activities.
What is GAAP? - ANS ✔✔Generally Accepted Accounting Principles - A set of accounting
standards that have substantial authoratitive support and guide accounting professionals
Historical Cost Principle - ANS ✔✔requires companies to record assets at their cost
Revenue Recognition Principle - ANS ✔✔Requires that companies recognize revenue in the
accounting period in which the performance obligation is satisfied.
Expense Recognition Principle - ANS ✔✔Requires that companies recognize expenses in the
period when the company makes efforts to generate those revenues.
Unearned Revenue - ANS ✔✔Cash received before service is performed
Prepaid Expense - ANS ✔✔Expenses paid in cash and recorded as assets before they are used or
consumed.
Accounting cycle steps - ANS ✔✔1) Analyze business transactions
2) Journalize the transactions
3) Post to ledger accounts
4) Prepare trial balance
5) Journalize and post adjusting entries
6) Prepare an adjusted trial balance
7) Prepare financial statements
8) Journalize and post closing entries
WITH CORRECT ANSWERS
Authorized Stock - ANS ✔✔The amount of stock that a corporation is authorized to sell as
indicated by its charter.
Issued Stock - ANS ✔✔Outstanding + Treasury stock
Outstanding Stock - ANS ✔✔Capital stock that has been issued and is being held by
stockholders.
Treasury Stock - ANS ✔✔A corporations own stock that has been reacquried by the corporation
and is being held for future use.
4 Financial Statements (in order) - ANS ✔✔Income Statement, Retained Earnings Statement,
Balance Sheet, Statement of Cash Flows
Purpose of Income Statement - ANS ✔✔To show how successfully your business performed in a
period (profitability)
Purpose of Retained Earning Statement - ANS ✔✔To indicate how much of previous income was
distributed to you and other owners of your business in the form of dividends, and how much
was retained in the business to allow for future growth
Purpose of Balance Sheet - ANS ✔✔To present a picture at a point in tome of what your
business owns (assets) and what it owes (liabilities).
, Purpose of Statement of Cash Flows - ANS ✔✔To provide primary information about cash
receipts (inflows) and cash payments (outflows) from operating, investing, and financing
activities.
What is GAAP? - ANS ✔✔Generally Accepted Accounting Principles - A set of accounting
standards that have substantial authoratitive support and guide accounting professionals
Historical Cost Principle - ANS ✔✔requires companies to record assets at their cost
Revenue Recognition Principle - ANS ✔✔Requires that companies recognize revenue in the
accounting period in which the performance obligation is satisfied.
Expense Recognition Principle - ANS ✔✔Requires that companies recognize expenses in the
period when the company makes efforts to generate those revenues.
Unearned Revenue - ANS ✔✔Cash received before service is performed
Prepaid Expense - ANS ✔✔Expenses paid in cash and recorded as assets before they are used or
consumed.
Accounting cycle steps - ANS ✔✔1) Analyze business transactions
2) Journalize the transactions
3) Post to ledger accounts
4) Prepare trial balance
5) Journalize and post adjusting entries
6) Prepare an adjusted trial balance
7) Prepare financial statements
8) Journalize and post closing entries
