ECU ACCT 2401 Final Exam Study Guide | Accounting Review, Key Concepts & Practice
Questions
what increases equity? - ANS ✔✔revenues and common stock
what decreases equity? - ANS ✔✔expenses and dividends
Assets - ANS ✔✔resources a business owns & controls. Expected to provide current & future
benefits
Asset examples - ANS ✔✔cash, accounts receivable, land, supplies, prepaid insurance, etc.
Liabilities - ANS ✔✔Creditor's claim on assets, that provides assets, products, or services to
others.
Liabilities examples - ANS ✔✔accounts payable, unearned revenue, wages payable, interest
payable, long term notes payable, loans, etc.
Owner's Equity - ANS ✔✔owner's claim on asset
Equity examples - ANS ✔✔common stock, revenues, dividends, retained earnings.
Accounting equation - ANS ✔✔Assets = Liabilities + Equity
Effects of transactions on the accounting equation - ANS ✔✔If total assets increase, then
liabilities or stockholders' equity increases by the same amount.
•If total assets decrease, then liabilities or stockholders' equity decreases by the same amount.
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, Income Statement - ANS ✔✔describes a company's revenues and expenses and computes net
income or loss over a period of time.
Income Statement Equation - ANS ✔✔Net Income = Revenue - Expenses
Statement of Retained Earnings - ANS ✔✔explains changes in retained earnings from net
income (or loss) and from any dividends over a period of time.
What is reported on the balance sheet? - ANS ✔✔assets, liabilities, equity
Balance Sheet - ANS ✔✔describes a company's financial position (types and amounts of assets,
liabilities, and equity) at a point in time.
Debit - ANS ✔✔Recorded on the left side; an entry that increases an asset or expense account,
or decreases a liability, revenue, or equity account.
Credit - ANS ✔✔Recorded on the right side; an entry that decreases an asset or expense
account, or increases a liability, revenue, or equity account
normal balance of an account - ANS ✔✔The normal balance of an account can be either a debit
or a credit depending on whether increases in the account are recorded as debits or credits.
What accounts increase with a debit? - ANS ✔✔assets, expenses, dividends
what accounts increase with a credit - ANS ✔✔liabilities, revenues, common stock, retained
earnings
Questions
what increases equity? - ANS ✔✔revenues and common stock
what decreases equity? - ANS ✔✔expenses and dividends
Assets - ANS ✔✔resources a business owns & controls. Expected to provide current & future
benefits
Asset examples - ANS ✔✔cash, accounts receivable, land, supplies, prepaid insurance, etc.
Liabilities - ANS ✔✔Creditor's claim on assets, that provides assets, products, or services to
others.
Liabilities examples - ANS ✔✔accounts payable, unearned revenue, wages payable, interest
payable, long term notes payable, loans, etc.
Owner's Equity - ANS ✔✔owner's claim on asset
Equity examples - ANS ✔✔common stock, revenues, dividends, retained earnings.
Accounting equation - ANS ✔✔Assets = Liabilities + Equity
Effects of transactions on the accounting equation - ANS ✔✔If total assets increase, then
liabilities or stockholders' equity increases by the same amount.
•If total assets decrease, then liabilities or stockholders' equity decreases by the same amount.
****
, Income Statement - ANS ✔✔describes a company's revenues and expenses and computes net
income or loss over a period of time.
Income Statement Equation - ANS ✔✔Net Income = Revenue - Expenses
Statement of Retained Earnings - ANS ✔✔explains changes in retained earnings from net
income (or loss) and from any dividends over a period of time.
What is reported on the balance sheet? - ANS ✔✔assets, liabilities, equity
Balance Sheet - ANS ✔✔describes a company's financial position (types and amounts of assets,
liabilities, and equity) at a point in time.
Debit - ANS ✔✔Recorded on the left side; an entry that increases an asset or expense account,
or decreases a liability, revenue, or equity account.
Credit - ANS ✔✔Recorded on the right side; an entry that decreases an asset or expense
account, or increases a liability, revenue, or equity account
normal balance of an account - ANS ✔✔The normal balance of an account can be either a debit
or a credit depending on whether increases in the account are recorded as debits or credits.
What accounts increase with a debit? - ANS ✔✔assets, expenses, dividends
what accounts increase with a credit - ANS ✔✔liabilities, revenues, common stock, retained
earnings
