Southern New Hampshire University ACC201: Financial Accounting – Final Exam with Q&As with rationals

Southern New Hampshire University ACC201
Financial Accounting – Final Exam (150+
Questions And Answers with Rationales)

COURSE OVERVIEW
ACC201 Financial Accounting is a foundational course that
introduces you to the language of business. You will learn
the steps of the accounting cycle, how to prepare financial
statements, and how to analyze financial information. The
course covers the roles and responsibilities of the
accountant, retail business and inventory, accounting for
receivables, long-term assets and liabilities, and accounting
for corporate stock transactions.
Key Topics Covered on the Final Exam:
• The Accounting Equation & Double-Entry Accounting
• The Accounting Cycle (Journalizing, Posting, Trial
Balance, Adjusting Entries, Closing Entries)
• The Four Basic Financial Statements (Income
Statement, Statement of Retained Earnings, Balance
Sheet, Statement of Cash Flows)

, • Cash & Internal Controls
• Accounts Receivable & Bad Debt Expense
• Inventory & Cost of Goods Sold (FIFO, LIFO, Weighted
Average)
• Long-Term Assets & Depreciation
• Liabilities (Current and Long-Term)
• Stockholders' Equity
• Financial Statement Analysis & Ratios


PART 1: THE ACCOUNTING EQUATION & DOUBLE-ENTRY
ACCOUNTING (Questions 1-20)
Question 1
What is the fundamental accounting equation?
• A) Assets = Liabilities + Revenues
• B) Assets = Liabilities + Stockholders' Equity
• C) Assets = Stockholders' Equity - Liabilities
• D) Revenues - Expenses = Net Income
• Answer: B

, • Rationale: The fundamental accounting equation is
Assets = Liabilities + Stockholders' Equity. This equation
must always balance and forms the foundation of
double-entry accounting.


Question 2
What is the normal balance for an asset account?
• A) Credit
• B) Debit
• C) Either debit or credit
• D) Zero
• Answer: B
• Rationale: Assets have a normal debit balance. To
increase an asset account, you debit it. Liabilities and
equity accounts have normal credit balances.


Question 3
What is the normal balance for a liability account?
• A) Debit
• B) Credit

, • C) Either debit or credit
• D) Zero
• Answer: B
• Rationale: Liabilities have a normal credit balance. To
increase a liability account, you credit it.


Question 4
What is the normal balance for a stockholders' equity
account?
• A) Debit
• B) Credit
• C) Either debit or credit
• D) Zero
• Answer: B
• Rationale: Stockholders' equity accounts have a normal
credit balance. Revenues increase equity and are
credits; expenses and dividends decrease equity and
are debits.