MBA 510 CORRECT SET ANSWERS AND QUESTIONS
SET A+
✔✔Income Statement - ✔✔A financial statement showing the revenue and expenses for
a fiscal period.
✔✔Statement of Retained Earnings - ✔✔Reports the way that net income and the
distribution of dividends affected the financial position of the company during the
accounting period.
✔✔Balance Sheet - ✔✔A financial statement that reports assets, liabilities, and owner's
equity on a specific date.
✔✔Statement of Cash Flows - ✔✔A financial statement that provides financial
information about the cash receipts and cash payments of a business for a specific
period of time.
✔✔Return on assets equation - ✔✔net income/average total assets
✔✔Securities and Exchange Commission (SEC) - ✔✔monitors the stock market and
enforces laws regulating the sale of stocks and bonds
✔✔Source Documents - ✔✔identify and describe transactions and events entering the
accounting process
✔✔General ledger - ✔✔a record of all accounts used by a company
✔✔The Chart of accounts - ✔✔a list of all ledger accounts and has an identification
number assigned to each account
✔✔T-Account - ✔✔represents a ledger account and is a tool used to understand the
effects of one or more transactions
, ✔✔account balance - ✔✔the difference between the total debits and the total credits in
an account
✔✔double-entry accounting - ✔✔demands the accounting equation remain in balance
✔✔journal - ✔✔complete record of each transaction in one place
✔✔journalizing - ✔✔Recording transactions in a journal
✔✔posting - ✔✔transferring information from a journal entry to a ledger account
✔✔Posting reference (PR) column - ✔✔A column in journals in which individual ledger
account numbers are entered when entries are posted to those ledger accounts.
✔✔FastForward 4 steps - ✔✔1. Identify the transaction and any source documents.
2. Analyze the transaction using the accounting equation.
3. Record the transaction in journal entry form applying double entry accounting.
4. Post the entry
✔✔Trial Balance - ✔✔a list of all ledger accounts with their balances at a point in time
✔✔Debt Ratio - ✔✔total liabilities/total assets
✔✔Time Period Assumption - ✔✔Presumes that the life of a company can be divided
into time periods, such as months and years.
✔✔annual financial statements - ✔✔reports covering a one-year period
✔✔interim financial statements - ✔✔Financial statements covering periods of less than
one year; usually based on one-, three-, or six-month periods.
✔✔fiscal year - ✔✔A 12-month period from any time
✔✔Accrual Basis Accounting - ✔✔records revenues when earned and expenses when
incurred, regardless of the timing of cash receipts or payments
✔✔Cash Basis Accounting - ✔✔records revenues when cash is received and expenses
when cash is paid
✔✔Revenue Recognition Principle - ✔✔requires that companies recognize revenue in
the accounting period in which the performance obligation is satisfied
✔✔Expense Recognition Principle - ✔✔Requires recognition of expenses in the same
period as related revenues.
SET A+
✔✔Income Statement - ✔✔A financial statement showing the revenue and expenses for
a fiscal period.
✔✔Statement of Retained Earnings - ✔✔Reports the way that net income and the
distribution of dividends affected the financial position of the company during the
accounting period.
✔✔Balance Sheet - ✔✔A financial statement that reports assets, liabilities, and owner's
equity on a specific date.
✔✔Statement of Cash Flows - ✔✔A financial statement that provides financial
information about the cash receipts and cash payments of a business for a specific
period of time.
✔✔Return on assets equation - ✔✔net income/average total assets
✔✔Securities and Exchange Commission (SEC) - ✔✔monitors the stock market and
enforces laws regulating the sale of stocks and bonds
✔✔Source Documents - ✔✔identify and describe transactions and events entering the
accounting process
✔✔General ledger - ✔✔a record of all accounts used by a company
✔✔The Chart of accounts - ✔✔a list of all ledger accounts and has an identification
number assigned to each account
✔✔T-Account - ✔✔represents a ledger account and is a tool used to understand the
effects of one or more transactions
, ✔✔account balance - ✔✔the difference between the total debits and the total credits in
an account
✔✔double-entry accounting - ✔✔demands the accounting equation remain in balance
✔✔journal - ✔✔complete record of each transaction in one place
✔✔journalizing - ✔✔Recording transactions in a journal
✔✔posting - ✔✔transferring information from a journal entry to a ledger account
✔✔Posting reference (PR) column - ✔✔A column in journals in which individual ledger
account numbers are entered when entries are posted to those ledger accounts.
✔✔FastForward 4 steps - ✔✔1. Identify the transaction and any source documents.
2. Analyze the transaction using the accounting equation.
3. Record the transaction in journal entry form applying double entry accounting.
4. Post the entry
✔✔Trial Balance - ✔✔a list of all ledger accounts with their balances at a point in time
✔✔Debt Ratio - ✔✔total liabilities/total assets
✔✔Time Period Assumption - ✔✔Presumes that the life of a company can be divided
into time periods, such as months and years.
✔✔annual financial statements - ✔✔reports covering a one-year period
✔✔interim financial statements - ✔✔Financial statements covering periods of less than
one year; usually based on one-, three-, or six-month periods.
✔✔fiscal year - ✔✔A 12-month period from any time
✔✔Accrual Basis Accounting - ✔✔records revenues when earned and expenses when
incurred, regardless of the timing of cash receipts or payments
✔✔Cash Basis Accounting - ✔✔records revenues when cash is received and expenses
when cash is paid
✔✔Revenue Recognition Principle - ✔✔requires that companies recognize revenue in
the accounting period in which the performance obligation is satisfied
✔✔Expense Recognition Principle - ✔✔Requires recognition of expenses in the same
period as related revenues.
