Intro To Financial Accounting Exam 1 with all Correct &
100% Verified Answers |Latest Version |Already
Graded A+
Accounting consists of three basic activities ✔Correct Answer-Identifies, records, communicates
Who uses Accounting Data ✔Correct Answer-External Users: Creditors and Investors
Recent Financial Scandals ✔Correct Answer-Enron, WorldCom, HealthSouth, AIG
Sarbanes-Oxley Act of (SOX). ✔Correct Answer-Added new criminal charges for accounting
scandals
Financial Statements ✔Correct Answer-Balance Sheet
Income Statement
Statement of Stock Holder's Equity
Statement of Cash Flows
Note Disclosure
Generally Accepted Accounting Principles (GAAP) ✔Correct Answer-Standards generally accepted
and universally practiced
Standard Setting Bodies ✔Correct Answer-Financial Accounting Standards Board (FASB)
(SEC)
International Accounting Standards Board
(IASB)
Historical Cost Principle ✔Correct Answer-dictates that companies record assets at their cost.
Fair Value Principle ✔Correct Answer-states that assets and liabilities should be reported at a fair
value
Monetary Unit Assumption ✔Correct Answer-companies include in accounting records only
transaction data expressed in money.
Economic Entity Assumption ✔Correct Answer-Requires that activities of the entity be kept
separate and distinct from activities of the owner
Combining activities of Kellogg and General Mills would violate? ✔Correct Answer-Economic Entity
Assumption
Corporation ✔Correct Answer-Ownership divided into shares of stock
Accounting Equation ✔Correct Answer-Assets= Liabilities + Stockholder's Equity
Assets ✔Correct Answer-Resources a business owns
Provide future service or benefits
Cash, Supplies, Equipment
, Liabilities ✔Correct Answer-Claims against assets (Debts and Obligations)
Creditors- Party to whom money is owed
Accounts Payable, Notes Payable
Stockholder's Equity ✔Correct Answer-Ownership claim on total Assets
Referred to as residual Equity
Common Stock and Retained Earnings
Dividends ✔Correct Answer-distribution of cash or other assets to stockholders. They reduce
retained earnings but are not an expense.
Expense ✔Correct Answer-are the cost of assets consumed or services used in the process of
earning revenue.
Transactions ✔Correct Answer-Economic events recorded by accountants
Income Statement ✔Correct Answer-Reports Profitability of the company
List Revenues first, followed by expenses
Shows net income or net loss
Retained Earnings statement ✔Correct Answer-Reports changes in retained earnings for same
period as income statement
Balance Sheet ✔Correct Answer-Reports the assets, liabilities, and stockholders' equity at a
specific date.
Is a snapshot of the company's financial condition at a specific moment in time
Statement or Cashflows ✔Correct Answer-Where did the cash come from
What was it used for
What was the change in balance
The Account ✔Correct Answer-Record of increases and decreases in a specific asset, liability,
equity, revenue, or expense
Double Entry System ✔Correct Answer-Debit one account, credit the other
Debits must equal Credits
Debits > Credits ✔Correct Answer-Account will have a debit balance
Credits>Debits ✔Correct Answer-Account will have a credit balance
Recording Assets ✔Correct Answer-Debits should exceed credits
Recording Liablities ✔Correct Answer-Credits should exceed debits
Normal balance is ✔Correct Answer-on the increase side
Owner's investments and revenues ✔Correct Answer-Increase stock holders equity (Credit)
100% Verified Answers |Latest Version |Already
Graded A+
Accounting consists of three basic activities ✔Correct Answer-Identifies, records, communicates
Who uses Accounting Data ✔Correct Answer-External Users: Creditors and Investors
Recent Financial Scandals ✔Correct Answer-Enron, WorldCom, HealthSouth, AIG
Sarbanes-Oxley Act of (SOX). ✔Correct Answer-Added new criminal charges for accounting
scandals
Financial Statements ✔Correct Answer-Balance Sheet
Income Statement
Statement of Stock Holder's Equity
Statement of Cash Flows
Note Disclosure
Generally Accepted Accounting Principles (GAAP) ✔Correct Answer-Standards generally accepted
and universally practiced
Standard Setting Bodies ✔Correct Answer-Financial Accounting Standards Board (FASB)
(SEC)
International Accounting Standards Board
(IASB)
Historical Cost Principle ✔Correct Answer-dictates that companies record assets at their cost.
Fair Value Principle ✔Correct Answer-states that assets and liabilities should be reported at a fair
value
Monetary Unit Assumption ✔Correct Answer-companies include in accounting records only
transaction data expressed in money.
Economic Entity Assumption ✔Correct Answer-Requires that activities of the entity be kept
separate and distinct from activities of the owner
Combining activities of Kellogg and General Mills would violate? ✔Correct Answer-Economic Entity
Assumption
Corporation ✔Correct Answer-Ownership divided into shares of stock
Accounting Equation ✔Correct Answer-Assets= Liabilities + Stockholder's Equity
Assets ✔Correct Answer-Resources a business owns
Provide future service or benefits
Cash, Supplies, Equipment
, Liabilities ✔Correct Answer-Claims against assets (Debts and Obligations)
Creditors- Party to whom money is owed
Accounts Payable, Notes Payable
Stockholder's Equity ✔Correct Answer-Ownership claim on total Assets
Referred to as residual Equity
Common Stock and Retained Earnings
Dividends ✔Correct Answer-distribution of cash or other assets to stockholders. They reduce
retained earnings but are not an expense.
Expense ✔Correct Answer-are the cost of assets consumed or services used in the process of
earning revenue.
Transactions ✔Correct Answer-Economic events recorded by accountants
Income Statement ✔Correct Answer-Reports Profitability of the company
List Revenues first, followed by expenses
Shows net income or net loss
Retained Earnings statement ✔Correct Answer-Reports changes in retained earnings for same
period as income statement
Balance Sheet ✔Correct Answer-Reports the assets, liabilities, and stockholders' equity at a
specific date.
Is a snapshot of the company's financial condition at a specific moment in time
Statement or Cashflows ✔Correct Answer-Where did the cash come from
What was it used for
What was the change in balance
The Account ✔Correct Answer-Record of increases and decreases in a specific asset, liability,
equity, revenue, or expense
Double Entry System ✔Correct Answer-Debit one account, credit the other
Debits must equal Credits
Debits > Credits ✔Correct Answer-Account will have a debit balance
Credits>Debits ✔Correct Answer-Account will have a credit balance
Recording Assets ✔Correct Answer-Debits should exceed credits
Recording Liablities ✔Correct Answer-Credits should exceed debits
Normal balance is ✔Correct Answer-on the increase side
Owner's investments and revenues ✔Correct Answer-Increase stock holders equity (Credit)
