CSUF ACCT 201A (HOFFMAN) FINAL
ACTUAL EXAM PAPER 2026
QUESTIONS WITH ANSWERS GRADED
A+
◍ What are the two primary functions of financial accounting?.
Answer: To measure business activities and communicate financial
information.
◍ Internal Controls in a organization are used to.
Answer: - safeguard its assets- enhance reliability of its accounting records-
increase efficiency of operations- insure compliance with laws and
regulations
◍ What is the definition of dividends in accounting?.
Answer: Dividends are distributions of a portion of a company's earnings to
its shareholders.
◍ Establishment of responsibility.
Answer: assign responsibility of a specific job to a specific employee and no
one else
◍ Segregation of duties.
Answer: different individuals should be responsible for related activities;
also employees who have access to the assets should not also have access to
the accounting records
◍ Documentation procedures.
Answer: all transactions should be supported by some type of
documentation; those documents should be prenumbered
◍ Physical controls.
, Answer: controls that restrict unauthorized individuals from gaining access
to a company; provide protection for assets and accounting records
◍ What are the characteristics of the four financial statements?.
Answer: The four financial statements include the balance sheet, income
statement, statement of cash flows, and statement of changes in equity, each
serving different reporting purposes.
◍ Independent internal verification.
Answer: an internal auditor (employee of the company) continuously
reviews data prepared by employees throughout the company
◍ What are generally accepted accounting principles (GAAP)?.
Answer: GAAP are a set of rules and standards used in financial accounting
to ensure consistency and transparency in financial reporting.
◍ Human resource controls.
Answer: bonding employees, requiring rotation/vacation for employees and
performing background checks before hiring individuals
◍ What roles do the FASB, SEC, and AICPA play in accounting?.
Answer: The FASB establishes accounting standards, the SEC regulates the
securities industry, and the AICPA represents accountants and sets ethical
standards.
◍ What is the purpose of adjusting entries in accounting?.
Answer: Adjusting entries are made to update account balances before
financial statements are prepared, ensuring that revenues and expenses are
recognized in the correct period.
◍ Limitations of internal control.
Answer: no matter how many controls are implemented by a company,
employees can always find ways to get around them;- Cost of the control
should not exceed the benefit of the control- Human element: we get lazy
and tired – sometimes we make mistakes because we’re too lazy to do it
properly or we just get tired and don’t realize we’ve made a mistake; also
collusion can occur which is where 2 or more employees work together to
, get around internal control
◍ What is the difference between accrual-basis and cash-basis accounting?.
Answer: Accrual-basis accounting recognizes revenues and expenses when
they are incurred, while cash-basis accounting recognizes them only when
cash is exchanged.
◍ What is the accounting cycle?.
Answer: The accounting cycle is a series of steps that includes identifying
transactions, recording them in journals, posting to ledgers, preparing trial
balances, and creating financial statements.
◍ What is the normal balance of an account?.
Answer: The normal balance of an account is the side (debit or credit) that
increases the account's balance.
◍ Bank reconciliation (basic definition).
Answer: process which explains why the bank's cash balance differs from
the company's cash balance and which determines the actual amount of cash
the company has
◍ Deposits in transit.
Answer: deposits that have been recorded by the company but not yet
received by the bank; added to bank in reconciliation process.
◍ Outstanding checks.
Answer: checks that have been issued and recorded by the company but not
yet paid by the bank; these are subtracted from the cash balance per the bank
during the reconciliation process
◍ Errors.
Answer: errors can be made by both the company and the bank; if an error is
made, it needs to be corrected by the entity that made the mistake;
depending on bank error or or company error it can be added or subtracted
to either books or bank, pay attention to the wording.
◍ What is the purpose of a trial balance?.
ACTUAL EXAM PAPER 2026
QUESTIONS WITH ANSWERS GRADED
A+
◍ What are the two primary functions of financial accounting?.
Answer: To measure business activities and communicate financial
information.
◍ Internal Controls in a organization are used to.
Answer: - safeguard its assets- enhance reliability of its accounting records-
increase efficiency of operations- insure compliance with laws and
regulations
◍ What is the definition of dividends in accounting?.
Answer: Dividends are distributions of a portion of a company's earnings to
its shareholders.
◍ Establishment of responsibility.
Answer: assign responsibility of a specific job to a specific employee and no
one else
◍ Segregation of duties.
Answer: different individuals should be responsible for related activities;
also employees who have access to the assets should not also have access to
the accounting records
◍ Documentation procedures.
Answer: all transactions should be supported by some type of
documentation; those documents should be prenumbered
◍ Physical controls.
, Answer: controls that restrict unauthorized individuals from gaining access
to a company; provide protection for assets and accounting records
◍ What are the characteristics of the four financial statements?.
Answer: The four financial statements include the balance sheet, income
statement, statement of cash flows, and statement of changes in equity, each
serving different reporting purposes.
◍ Independent internal verification.
Answer: an internal auditor (employee of the company) continuously
reviews data prepared by employees throughout the company
◍ What are generally accepted accounting principles (GAAP)?.
Answer: GAAP are a set of rules and standards used in financial accounting
to ensure consistency and transparency in financial reporting.
◍ Human resource controls.
Answer: bonding employees, requiring rotation/vacation for employees and
performing background checks before hiring individuals
◍ What roles do the FASB, SEC, and AICPA play in accounting?.
Answer: The FASB establishes accounting standards, the SEC regulates the
securities industry, and the AICPA represents accountants and sets ethical
standards.
◍ What is the purpose of adjusting entries in accounting?.
Answer: Adjusting entries are made to update account balances before
financial statements are prepared, ensuring that revenues and expenses are
recognized in the correct period.
◍ Limitations of internal control.
Answer: no matter how many controls are implemented by a company,
employees can always find ways to get around them;- Cost of the control
should not exceed the benefit of the control- Human element: we get lazy
and tired – sometimes we make mistakes because we’re too lazy to do it
properly or we just get tired and don’t realize we’ve made a mistake; also
collusion can occur which is where 2 or more employees work together to
, get around internal control
◍ What is the difference between accrual-basis and cash-basis accounting?.
Answer: Accrual-basis accounting recognizes revenues and expenses when
they are incurred, while cash-basis accounting recognizes them only when
cash is exchanged.
◍ What is the accounting cycle?.
Answer: The accounting cycle is a series of steps that includes identifying
transactions, recording them in journals, posting to ledgers, preparing trial
balances, and creating financial statements.
◍ What is the normal balance of an account?.
Answer: The normal balance of an account is the side (debit or credit) that
increases the account's balance.
◍ Bank reconciliation (basic definition).
Answer: process which explains why the bank's cash balance differs from
the company's cash balance and which determines the actual amount of cash
the company has
◍ Deposits in transit.
Answer: deposits that have been recorded by the company but not yet
received by the bank; added to bank in reconciliation process.
◍ Outstanding checks.
Answer: checks that have been issued and recorded by the company but not
yet paid by the bank; these are subtracted from the cash balance per the bank
during the reconciliation process
◍ Errors.
Answer: errors can be made by both the company and the bank; if an error is
made, it needs to be corrected by the entity that made the mistake;
depending on bank error or or company error it can be added or subtracted
to either books or bank, pay attention to the wording.
◍ What is the purpose of a trial balance?.
