FAC 1502 FINANCIAL ACCOUNTING ELEMENTARY CALCULATIONS FINAL PAPER EXAM QUESTIONS

FAC 1502 FINANCIAL ACCOUNTING ELEMENTARY CALCULATIONS FINAL PAPER EXAM
QUESTIONS ACCURATE ANSWERS FULL SOLUTION




Question:
● What are retained earnings?

Answer:
Profits kept in the business instead of paid as dividends.



Question:
● How to calculate retained earnings?

Answer:
Beginning RE + Net Income - Dividends = Ending RE



Question:
● What is par value?

Answer:
nominal (face) value assigned to stock; used for legal/accounting purposes, not market value.



Question:
● What is Paid-In Capital (PIC)?

Answer:
Amount investors pay above par value for stock.



Question:
● Formula for paid in capital

, Answer:
Issue Price - Par Value



Question:
● How do you record a normal partnership entry (investment)?

Answer:
Debit Cash (or asset), Credit Partner Capital



Question:
● What are the key characteristics of partnerships?

Answer:
Shared ownership Unlimited liability Mutual agency Limited life Pass-through taxation



Question:
● What is a sole proprietorship?

Answer:
A business owned by one person with full control and unlimited liability.



Question:
● What is mutual agency?

Answer:
Each partner can act on behalf of the business and bind the partnership legally.



Question:
● How do you find the balance of one capital account?

Answer: