Accounting 101 Final Exam Practice
Evaluation Questions and Answers
Verified Solutions Latest Update
2026/2027
Question:
Creditors' claims to a corporation's resources are referred to as what?
Answer:
liabilities
Question:
Investors' claims to a corporation's resources are referred to as what?
Answer:
shareholder's Equity
Question:
Understand the four assumptions that underline US GAAP (U.S Generally Accepted Accounting
Principles)
Answer:
economic entity, monetary unit, periodicity, and going concern
Question:
What are the two Fundamental Qualitative Characteristics of Useful Accounting Information?
Answer:
1. relevance
2. faithful Representation
,Question:
What is FASB, and what does this organization do?
Answer:
an independent, private-sector organization that establishes and updates U.S. GAAP accounting
standards for financial reporting
Question:
Who is the SEC, and what does this organization do?
Answer:
a U.S. government agency that protects investors, enforces securities laws, regulates financial
markets, and ensures fair and transparent trading
Question:
What is the U.S GAAP, and how do these rules and producers work?
Answer:
is the standard framework of rules and guidelines for financial reporting in the United States, set by
the FASB (Financial Accounting Standards Board) to ensure financial statements are consistent,
comparable, and transparent for investors, regulators, and the public. These rules cover everything
from asset valuation to revenue recognition, working by establishing core principles like
materiality, consistency, and the matching principle, dictating how and when transactions are
recorded to present a true financial picture, especially for public companies
Question:
What are the four major financial statements, and how are these statements prepared in order?
Answer:
income statement -> statement of stockholders' equity -> balance sheet -> statement of cash flows
Question:
What accounts are found in the Balance Sheet?
Answer:
, assets, liabilities, and stockholders' equity
Question:
What accounts are found in the Income Statements?
Answer:
revenues, cost of goods sold, operating expenses, and income tax expense
Question:
What are the two categories (major elements) of stockholders' equity usually found in a
corporation's balance sheet?
Answer:
common stock and retained earning
Question:
What is the accounting equation, and what are some possible alternative forms of it?
Answer:
assets = liabilities + shareholders' equities
Question:
What are the primary roles of auditors in financial reporting?
Answer:
provide independent assurance that financial statements are fairly presented and comply with
accounting standards
Question:
What are the two primary functions of financial accounting?
Answer:
measurement and communications
Evaluation Questions and Answers
Verified Solutions Latest Update
2026/2027
Question:
Creditors' claims to a corporation's resources are referred to as what?
Answer:
liabilities
Question:
Investors' claims to a corporation's resources are referred to as what?
Answer:
shareholder's Equity
Question:
Understand the four assumptions that underline US GAAP (U.S Generally Accepted Accounting
Principles)
Answer:
economic entity, monetary unit, periodicity, and going concern
Question:
What are the two Fundamental Qualitative Characteristics of Useful Accounting Information?
Answer:
1. relevance
2. faithful Representation
,Question:
What is FASB, and what does this organization do?
Answer:
an independent, private-sector organization that establishes and updates U.S. GAAP accounting
standards for financial reporting
Question:
Who is the SEC, and what does this organization do?
Answer:
a U.S. government agency that protects investors, enforces securities laws, regulates financial
markets, and ensures fair and transparent trading
Question:
What is the U.S GAAP, and how do these rules and producers work?
Answer:
is the standard framework of rules and guidelines for financial reporting in the United States, set by
the FASB (Financial Accounting Standards Board) to ensure financial statements are consistent,
comparable, and transparent for investors, regulators, and the public. These rules cover everything
from asset valuation to revenue recognition, working by establishing core principles like
materiality, consistency, and the matching principle, dictating how and when transactions are
recorded to present a true financial picture, especially for public companies
Question:
What are the four major financial statements, and how are these statements prepared in order?
Answer:
income statement -> statement of stockholders' equity -> balance sheet -> statement of cash flows
Question:
What accounts are found in the Balance Sheet?
Answer:
, assets, liabilities, and stockholders' equity
Question:
What accounts are found in the Income Statements?
Answer:
revenues, cost of goods sold, operating expenses, and income tax expense
Question:
What are the two categories (major elements) of stockholders' equity usually found in a
corporation's balance sheet?
Answer:
common stock and retained earning
Question:
What is the accounting equation, and what are some possible alternative forms of it?
Answer:
assets = liabilities + shareholders' equities
Question:
What are the primary roles of auditors in financial reporting?
Answer:
provide independent assurance that financial statements are fairly presented and comply with
accounting standards
Question:
What are the two primary functions of financial accounting?
Answer:
measurement and communications
