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Financial Accounting Study Guide (Exam 1) Questions and Answers Updated .

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Exam (elaborations)

Financial Accounting Study Guide (Exam 1) Questions and Answers Updated .

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2026/2027

Institution Financial Accounting

Course Financial accounting

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Financial Accounting Study Guide (Exam 1) Questions and Answers Updated .

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Financial Accounting
Study Guide (Exam 1)
Questions and Answers
Updated 2026-2027
FormulaBforBtheBIncomeBStatementB-BAnswerBRevenue-Expenses=NetBIncome

FormulaBforBtheBStatementBofBRetainedBEarningsB-
BAnswerBBeginningBRetainedBEarningsB+BNetBincomeBduringBtheBperiodB-
BdividendsBpaidB=BendingBretainedBearnings

FormulaBforBtheBBalanceBSheetB-BAnswerBAssets=LiabilitiesB+BStockholdersBEquity

FormulaBforBtheBStatementBofBCashBFlowsB-BAnswerBOperatingBCashBFlowsB(+/-
)BInvestingBCashBFlowsB(+/-)BFinancingBCashBFlowsB=BIncrease/DecreaseBinBCash

WhatBorderBareBtheBfinancialBstatementsBprepared?B-BAnswerBIncomeBStatementB---
>BStatementBofBRetainedBEarningsB--->BBalanceBSheetB--->BStatementBofBCashBFlows

WhatBisBaBChartBofBAccounts?B-
BAnswerBABchartBofBaccountsB(COA)BisBaBfinancialBorganizationalBtoolBthatBprovidesB
aBcompleteBlistingBofBeveryBaccountBinBanBaccountingBsystem.

WhatBareBretainedBearnings?B-
BAnswerBRetainedBearningsBisBtheBpercentageBofBnetBearningsBnotBpaidBoutBasBdivid
ends,BbutBretainedBbyBtheBcompanyBtoBbeBreinvestedBinBitsBcoreBbusiness,BorBtoBpa
yBdebt.BItBisBrecordedBunderBshareholders'BequityBonBtheBbalanceBsheet.

, DifferenceBbetweenBtheBBSBandBtheBISBaccountsB-
BAnswerBtheBbalanceBsheetBillustratesBaBcompany'sBbookBvalue,BandBtheBincomeBstat
ementBshowsBhowBassetsBandBliabilitiesBareBused.

DifferenceBbetweenBassets,Bliabilities,BandBownersBequityBaccountsB-BAnswerB-
AssetsB(whatBitBowns)

-LiabilitiesB(whatBitBowesBtoBothers)

-Owner'sBEquityB(theBdifferenceBbetweenBassetsBandBliabilities)

WhatBisBtheBproperBdatingBandBformBforBeachBofBtheBfinancialBstatements?B-
BAnswerB-
TheBtopBofBtheBbalanceBsheetBhasBthreeBitems:B(1)BtheBlegalBnameBofBtheBentity;B(2
)BtheBtitleB(i.e.,BbalanceBsheetBorBstatementBofBfinancialBposition);BandB(3)BtheBdateB
ofBtheBstatement.

-
IncomeBStatement:BtheBtopBisBtheBcompaniesBnameBandBtheBsecondBlineBisBtheBter
mB"consolidatedBstatementsBofBincome",BthirdBlineBisBtheBdate

WhatBdoBweBmeanBbyBtheB"costBprinciple"?B-
BAnswerBTheBcostBprincipleBrequiresBthatBassetsBbeBrecordedBatBtheBcashBamountB(o
rBitsBequivalent)BatBtheBtimeBthatBanBassetBisBacquired.

WhatBdoBweBmeanBbyBtheB"entityBprinciple"?B-
BAnswerBTheBeconomicBentityBprincipleBstatesBthatBtheBrecordedBactivitiesBofBaBbusi
nessBentityBwillBbeBkeptBseparateBfromBtheBrecordedBactivitiesBofBitsBowner(s)BandBa
nyBotherBbusinessBentities.BThisBmeansBthatByouBmustBmaintainBseparateBaccountingB
recordsBandBbankBaccountsBforBeachBentity,BandBnotBintermixBwithBthemBtheBassetsB
andBliabilitiesBofBitsBownersBorBbusinessBpartners.BAlso,ByouBmustBassociateBeveryBbu
sinessBtransactionBwithBanBentity.

WhatBdoBweBmeanBbyBtheB"matchingBprinciple"?B-BAnswerB-
TheBprincipleBthatBrequiresBaBcompanyBtoBmatchBexpensesBwithBrelatedBrevenuesBinB
orderBtoBreportBaBcompany'sBprofitabilityBduringBaBspecifiedBtimeBinterval.

-AlsoBknownBasBtheBexpenseBrecognitionBprinciple

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Uploaded on: October 6, 2026
Number of pages: 5
Written in: 2026/2027
Type: Exam (elaborations)
Contains: Questions & answers

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