ACCOUNTING 101 FINAL EXAM E ACTUAL
TEST QUESTIONS AND SOLVED ANSWERS
◉ Creditors' claims to a corporation's resources are referred to as
what?
Answer: liabilities
◉ Investors' claims to a corporation's resources are referred to as
what?
Answer: shareholder's Equity
◉ Understand the four assumptions that underline US GAAP (U.S
Generally Accepted Accounting Principles)
Answer: economic entity, monetary unit, periodicity, and going
concern
◉ What are the two Fundamental Qualitative Characteristics of
Useful Accounting Information?
Answer: 1. relevance
2. faithful Representation
◉ 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
◉ 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
◉ 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
◉ 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
, ◉ What accounts are found in the Balance Sheet?
Answer: assets, liabilities, and stockholders' equity
◉ What accounts are found in the Income Statements?
Answer: revenues, cost of goods sold, operating expenses, and
income tax expense
◉ What are the two categories (major elements) of stockholders'
equity usually found in a corporation's balance sheet?
Answer: common stock and retained earning
◉ What is the accounting equation, and what are some possible
alternative forms of it?
Answer: assets = liabilities + shareholders' equities
◉ 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
◉ What are the two primary functions of financial accounting?
Answer: measurement and communications
TEST QUESTIONS AND SOLVED ANSWERS
◉ Creditors' claims to a corporation's resources are referred to as
what?
Answer: liabilities
◉ Investors' claims to a corporation's resources are referred to as
what?
Answer: shareholder's Equity
◉ Understand the four assumptions that underline US GAAP (U.S
Generally Accepted Accounting Principles)
Answer: economic entity, monetary unit, periodicity, and going
concern
◉ What are the two Fundamental Qualitative Characteristics of
Useful Accounting Information?
Answer: 1. relevance
2. faithful Representation
◉ 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
◉ 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
◉ 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
◉ 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
, ◉ What accounts are found in the Balance Sheet?
Answer: assets, liabilities, and stockholders' equity
◉ What accounts are found in the Income Statements?
Answer: revenues, cost of goods sold, operating expenses, and
income tax expense
◉ What are the two categories (major elements) of stockholders'
equity usually found in a corporation's balance sheet?
Answer: common stock and retained earning
◉ What is the accounting equation, and what are some possible
alternative forms of it?
Answer: assets = liabilities + shareholders' equities
◉ 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
◉ What are the two primary functions of financial accounting?
Answer: measurement and communications
