Accounting 101 Final Exam With 100% Correct Answers 2023

What is accounting? - Correct answer-the action or process of keeping financial accounts revenues - Correct answer-inflows of assets resulting from the sale of goods and services expenses - Correct answer-outflow of assets resulting from the sale of goods and services internal user - Correct answer-managerial accounting external user - Correct answer-financial accounting who is responsible for GAAP - Correct answer-FASB accounting equation - Correct answer-assets = liabilities + owners equity international accounting standards board (IFRS) is responsible for - Correct answerdeveloping a single set of worldwide accounting standards These standards will help companies to reduce accounting costs, make it easier to acquire foreign companies, and facilitate comparisons between foreign companies - Correct answer-(IFRS) international accounting standards board primary objective of financial reporting - Correct answer-provide economic information to permit users of the information to make informed decisions what makes information relevant - Correct answer-it must be able to make a difference in a decision assets are recorded at historical/original cost because - Correct answer-it is objective and verifiable financial information should be understandable to whom - Correct answer-those willing to spend the necessary time to understand it balance sheet - Correct answer-lists assets, liabilities, and owner's equity income statement - Correct answer-revenues minus expenses equal net income net income - Correct answer-revenues - expenses order of statement preparation - Correct answer-income statement, statement of retained earnings, balance sheet and statement of cash flows account and types of accounts - Correct answer-a record or statement of financial expenditure or receipts relating to a particular period or purpose real, personal, and nominal how transactions affect the accounting equation - Correct answer-the balance is maintained because every business transaction affects at least two of a company's accounts such as: when a company borrows money from a bank the company's assets will increase and its liabilities will increase by the same amount left side - Correct answer-debit right side - Correct answer-credit initial recording of transaction is made in a journal/general journal is - Correct answerjournal entry, journalizing this entry is then posted to ledger/general ledger purpose of trial balance - Correct answer-lists all accounts with their balances, assets first, then liabilities and stockholders equity. shows whether total debits equal total credits accounts receivable - Correct answer-money owed to a business by its clients ( customers or debtors) and shown on its balance sheet as an asset accounts payable - Correct answer-money owed by a business to its suppliers shown as a liability on a company's balance sheet ending balance - Correct answer-the starting balance is equal to the ending balance when is revenue recognized with respect to accrual accounting - Correct answer-when earned when is revenue recognized with respect to cash basis accounting - Correct answerwhen cash is received when are the adjusting entries required - Correct answer-end of the period supplies - Correct answer-debit- supplies expense credit- supplies revenue to record supplies for the month unearned revenues/ advance payments - Correct answer-debit- advance payments receivables- unearned service revenue credit- advance payment revenues (service revenue) to record unearned revenues but not yet received depreciation - Correct answer-debit- depreciation expense credit- accumulated depreciation to record depreciation for the month accrued salaries and wages - Correct answer-debit- wage and salary expense credit- wages and salary payable to record wages and salaries owed closing entries: revenue and expense accounts are closed to retained earnings at the end of the year - Correct answer-they balance back to zero at the end of the year separation of duties - Correct answer-is the concept of having more than one person required to complete a task such as: in a business the separation by sharing of more than one individual deposits in transit - Correct answer-add to bank statement outstanding checks - Correct answer-subtract from bank statement service charges - Correct answer-subtract from books interest earned - Correct answer-add to books errors - Correct answer-add to bank statement controls over cash, especially for cash sales - Correct answer-- segregation of duties - proper authorization -adequate documents and records -physical controls what accounting function can be preformed only by a CPA - Correct answer-auditing functions petty cash - Correct answer-an accessible store of money kept by an organization for expenditure on small items petty cash journal is a debit to the petty cash account and credit to cash account credit terms 2/10, n/30 - Correct answer-2/10: 2 percent cash discount pay within 10 days n/10: entire balance us due within 30 days FOB shipping point - Correct answer-require the buyer to pay for the shipping costs FOB destination point - Correct answer-require the seller to pay for the costs of shipping for merchandise to the buyer 2 methods for accounting for bad debts - Correct answer-direct write off method allowance method Net realizable value of accounts receivable - Correct answer-equals accounts receivable - allowance for uncollectible accounts (bad debits) interest for notes receivable - Correct answer-principal annual interest rate * period = interest gross profit - Correct answer-equals sales - cost of goods sold periodic method - Correct answer-periodic inventory system is following journal entry is recorded at the end of accounting period. perpetual method - Correct answer-perpetual inventory system changes in merchandise inventory account are recorded after each transaction inventory is an - Correct answer-asset / current asset when inventory is sold it becomes - Correct answer-expense (cost of goods sold) example of matching principle multiple step income statement (which includes gross profit is generally used by) - Correct answer-merchandisers and retailers FIFO - Correct answer-first in first out