BUS-A 490: INDEPENDENT STUDY IN ACCOUNTING
LATEST VERSION EXAM - VERIFIED QUESTIONS AND ANSWERS -
COMPLETE COVERAGE
BUS-A 490: INDEPENDENT STUDY IN ACCOUNTING
1. What is accounting?
CORRECT ANSWER : Accounting is the process of recording,
classifying, summarizing, analyzing, and communicating financial
information.
2. What is the main purpose of accounting?
CORRECT ANSWER : The main purpose is to provide useful
financial information for decision-making.
3. What are the major branches of accounting?
CORRECT ANSWER : Financial accounting, managerial accounting,
tax accounting, auditing, and governmental accounting.
4. What is financial accounting?
CORRECT ANSWER : Financial accounting focuses on preparing
financial statements for external users.
5. What is managerial accounting?
CORRECT ANSWER : Managerial accounting provides financial and
operational information for internal decision-making.
6. Who are external users of accounting information?
CORRECT ANSWER : Investors, creditors, regulators, customers,
suppliers, and other parties outside the organization.
7. Who are internal users of accounting information?
CORRECT ANSWER : Managers, supervisors, executives, and
employees who use information for organizational decisions.
,8. What is the accounting equation?
CORRECT ANSWER : Assets = Liabilities + Equity.
9. What is an asset?
CORRECT ANSWER : An asset is a resource controlled by an entity
that provides future economic benefits.
10. What is a liability?
CORRECT ANSWER : A liability is a present obligation arising from
past events that is expected to require economic resources to settle.
11. What is equity?
CORRECT ANSWER : Equity represents the residual interest in
assets after deducting liabilities.
12. What is revenue?
CORRECT ANSWER : Revenue is income arising from an entity's
ordinary activities.
13. What is an expense?
CORRECT ANSWER : An expense is a decrease in economic benefits
arising from the ordinary activities of an entity.
14. What is a gain?
CORRECT ANSWER : A gain is an increase in equity resulting from
transactions or events outside the entity's ordinary activities.
15. What is a loss?
CORRECT ANSWER : A loss is a decrease in equity resulting from
transactions or events outside ordinary activities.
16. What is bookkeeping?
CORRECT ANSWER : Bookkeeping is the systematic recording of
financial transactions.
17. How does accounting differ from bookkeeping?
CORRECT ANSWER : Bookkeeping focuses on recording
transactions, while accounting also includes analysis, interpretation,
reporting, and decision support.
18. What is the double-entry system?
CORRECT ANSWER : Double-entry accounting records each
transaction with equal total debits and credits.
,19. What is a debit?
CORRECT ANSWER : A debit is an entry recorded on the left side of
an account.
20. What is a credit?
CORRECT ANSWER : A credit is an entry recorded on the right side
of an account.
21. Which accounts normally have debit balances?
CORRECT ANSWER : Assets and expenses normally have debit
balances.
22. Which accounts normally have credit balances?
CORRECT ANSWER : Liabilities, equity, and revenue normally have
credit balances.
23. What is a journal?
CORRECT ANSWER : A journal is a chronological record of financial
transactions.
24. What is a ledger?
CORRECT ANSWER : A ledger contains individual accounts used to
classify and summarize transactions.
25. What is a trial balance?
CORRECT ANSWER : A trial balance lists ledger account balances to
test whether total debits equal total credits.
26. What is a general ledger?
CORRECT ANSWER : The general ledger is the primary collection of
all accounts used by an organization.
27. What is a subsidiary ledger?
CORRECT ANSWER : A subsidiary ledger provides detailed
information supporting a controlling general ledger account.
28. What is an account receivable?
CORRECT ANSWER : Accounts receivable represent amounts owed
to a business by customers.
29. What is an account payable?
CORRECT ANSWER : Accounts payable represent amounts owed by
a business to suppliers or other creditors.
, 30. What is inventory?
CORRECT ANSWER : Inventory consists of goods held for sale or
materials used in producing goods or services.
31. What is cash accounting?
CORRECT ANSWER : Cash accounting recognizes transactions when
cash is received or paid.
32. What is accrual accounting?
CORRECT ANSWER : Accrual accounting recognizes economic
events when they occur, regardless of when cash changes hands.
33. Why is accrual accounting important?
CORRECT ANSWER : It provides a better matching of revenues and
expenses for a reporting period.
34. What is the matching principle?
CORRECT ANSWER : The matching principle associates expenses
with the revenues they help generate during the same period.
35. What is the revenue recognition principle?
CORRECT ANSWER : Revenue is recognized when the applicable
recognition requirements are satisfied.
36. What is the going concern assumption?
CORRECT ANSWER : It assumes an entity will continue operating
for the foreseeable future.
37. What is the economic entity assumption?
CORRECT ANSWER : It treats the business as separate from its
owners and other entities.
38. What is the monetary unit assumption?
CORRECT ANSWER : It assumes financial transactions are
measured and reported using a monetary unit.
39. What is the time period assumption?
CORRECT ANSWER : It divides an entity's continuous activities into
reporting periods.
40. What is consistency in accounting?
CORRECT ANSWER : Consistency means applying accounting
methods consistently between comparable periods unless a justified
change is required.
LATEST VERSION EXAM - VERIFIED QUESTIONS AND ANSWERS -
COMPLETE COVERAGE
BUS-A 490: INDEPENDENT STUDY IN ACCOUNTING
1. What is accounting?
CORRECT ANSWER : Accounting is the process of recording,
classifying, summarizing, analyzing, and communicating financial
information.
2. What is the main purpose of accounting?
CORRECT ANSWER : The main purpose is to provide useful
financial information for decision-making.
3. What are the major branches of accounting?
CORRECT ANSWER : Financial accounting, managerial accounting,
tax accounting, auditing, and governmental accounting.
4. What is financial accounting?
CORRECT ANSWER : Financial accounting focuses on preparing
financial statements for external users.
5. What is managerial accounting?
CORRECT ANSWER : Managerial accounting provides financial and
operational information for internal decision-making.
6. Who are external users of accounting information?
CORRECT ANSWER : Investors, creditors, regulators, customers,
suppliers, and other parties outside the organization.
7. Who are internal users of accounting information?
CORRECT ANSWER : Managers, supervisors, executives, and
employees who use information for organizational decisions.
,8. What is the accounting equation?
CORRECT ANSWER : Assets = Liabilities + Equity.
9. What is an asset?
CORRECT ANSWER : An asset is a resource controlled by an entity
that provides future economic benefits.
10. What is a liability?
CORRECT ANSWER : A liability is a present obligation arising from
past events that is expected to require economic resources to settle.
11. What is equity?
CORRECT ANSWER : Equity represents the residual interest in
assets after deducting liabilities.
12. What is revenue?
CORRECT ANSWER : Revenue is income arising from an entity's
ordinary activities.
13. What is an expense?
CORRECT ANSWER : An expense is a decrease in economic benefits
arising from the ordinary activities of an entity.
14. What is a gain?
CORRECT ANSWER : A gain is an increase in equity resulting from
transactions or events outside the entity's ordinary activities.
15. What is a loss?
CORRECT ANSWER : A loss is a decrease in equity resulting from
transactions or events outside ordinary activities.
16. What is bookkeeping?
CORRECT ANSWER : Bookkeeping is the systematic recording of
financial transactions.
17. How does accounting differ from bookkeeping?
CORRECT ANSWER : Bookkeeping focuses on recording
transactions, while accounting also includes analysis, interpretation,
reporting, and decision support.
18. What is the double-entry system?
CORRECT ANSWER : Double-entry accounting records each
transaction with equal total debits and credits.
,19. What is a debit?
CORRECT ANSWER : A debit is an entry recorded on the left side of
an account.
20. What is a credit?
CORRECT ANSWER : A credit is an entry recorded on the right side
of an account.
21. Which accounts normally have debit balances?
CORRECT ANSWER : Assets and expenses normally have debit
balances.
22. Which accounts normally have credit balances?
CORRECT ANSWER : Liabilities, equity, and revenue normally have
credit balances.
23. What is a journal?
CORRECT ANSWER : A journal is a chronological record of financial
transactions.
24. What is a ledger?
CORRECT ANSWER : A ledger contains individual accounts used to
classify and summarize transactions.
25. What is a trial balance?
CORRECT ANSWER : A trial balance lists ledger account balances to
test whether total debits equal total credits.
26. What is a general ledger?
CORRECT ANSWER : The general ledger is the primary collection of
all accounts used by an organization.
27. What is a subsidiary ledger?
CORRECT ANSWER : A subsidiary ledger provides detailed
information supporting a controlling general ledger account.
28. What is an account receivable?
CORRECT ANSWER : Accounts receivable represent amounts owed
to a business by customers.
29. What is an account payable?
CORRECT ANSWER : Accounts payable represent amounts owed by
a business to suppliers or other creditors.
, 30. What is inventory?
CORRECT ANSWER : Inventory consists of goods held for sale or
materials used in producing goods or services.
31. What is cash accounting?
CORRECT ANSWER : Cash accounting recognizes transactions when
cash is received or paid.
32. What is accrual accounting?
CORRECT ANSWER : Accrual accounting recognizes economic
events when they occur, regardless of when cash changes hands.
33. Why is accrual accounting important?
CORRECT ANSWER : It provides a better matching of revenues and
expenses for a reporting period.
34. What is the matching principle?
CORRECT ANSWER : The matching principle associates expenses
with the revenues they help generate during the same period.
35. What is the revenue recognition principle?
CORRECT ANSWER : Revenue is recognized when the applicable
recognition requirements are satisfied.
36. What is the going concern assumption?
CORRECT ANSWER : It assumes an entity will continue operating
for the foreseeable future.
37. What is the economic entity assumption?
CORRECT ANSWER : It treats the business as separate from its
owners and other entities.
38. What is the monetary unit assumption?
CORRECT ANSWER : It assumes financial transactions are
measured and reported using a monetary unit.
39. What is the time period assumption?
CORRECT ANSWER : It divides an entity's continuous activities into
reporting periods.
40. What is consistency in accounting?
CORRECT ANSWER : Consistency means applying accounting
methods consistently between comparable periods unless a justified
change is required.
