FINANCIAL & MANAGERIAL ACCOUNTING EXAM 1| QUESTIONS &
ANSWERS VERIFIED SOLUTIONS 100%|GRADE A+|LATEST 2024/2025
Accounting - ✔✔an information and measurement system that identifies, records and communicates
relevant, reliable and comparable information about an organizations activities
Recordkeeping/Bookkeeping - ✔✔the recording of transactions and events, either manually or
electronically
External Users - ✔✔not directly involved in running the organization, need to all coincide with one
method
Internal Information Users - ✔✔those directly involved in managing and operating an organization, not
so concerned with others
Ethics - ✔✔beliefs that distinguish right from wrong
Measurement Principle (cost principle) - ✔✔accounting information is based on actual cost
Revenue (sales) Recognition - ✔✔provides guidance on when a company must recognize revenue
Expense Recognition Principle (matching principle) - ✔✔record the expenses it incurred to generate the
revenue reported
Full Disclosure - ✔✔prescribes that a company report the details behind financial statements that would
impact users' decisions.
Accounting Equation (simple) - ✔✔Assets = Liabilities + Equity
Assets - ✔✔resources a company owns or controls
, Liabilities - ✔✔creditors' claims on assets (reflect company obligations to provide assets, products or
services to others)
Equity (net assets/residual equity) - ✔✔the owner's claim on assets, has two parts: -contributed capital
-retained earnings
Contributed Capital - ✔✔amount that stockholders invest in the company included under common stock
Retained Earnings - ✔✔refer to income (revenues less expenses) that has not been distributed to its
stockholders
net income - cash dividends = retained earnings
Dividends - ✔✔distribution of assets to stockholders
Revenues - ✔✔Increase retained earnings and are resources generated from a company's earnings
activities
Expenses - ✔✔decrease retained earnings and are the cost of assets or services used to earn revenues
Accounting Equation (full and complicated) - ✔✔Assets = liabilities + Equity [contributed capital +
retained earnings]
Assets = liabilities + common stock + retained earnings [- dividends + revenue - expenses]
Net Income - ✔✔when revenues exceed expenses (increase equity)
revenue - expenses
Net loss - ✔✔when expenses exceed revenues (decrease equity)
ANSWERS VERIFIED SOLUTIONS 100%|GRADE A+|LATEST 2024/2025
Accounting - ✔✔an information and measurement system that identifies, records and communicates
relevant, reliable and comparable information about an organizations activities
Recordkeeping/Bookkeeping - ✔✔the recording of transactions and events, either manually or
electronically
External Users - ✔✔not directly involved in running the organization, need to all coincide with one
method
Internal Information Users - ✔✔those directly involved in managing and operating an organization, not
so concerned with others
Ethics - ✔✔beliefs that distinguish right from wrong
Measurement Principle (cost principle) - ✔✔accounting information is based on actual cost
Revenue (sales) Recognition - ✔✔provides guidance on when a company must recognize revenue
Expense Recognition Principle (matching principle) - ✔✔record the expenses it incurred to generate the
revenue reported
Full Disclosure - ✔✔prescribes that a company report the details behind financial statements that would
impact users' decisions.
Accounting Equation (simple) - ✔✔Assets = Liabilities + Equity
Assets - ✔✔resources a company owns or controls
, Liabilities - ✔✔creditors' claims on assets (reflect company obligations to provide assets, products or
services to others)
Equity (net assets/residual equity) - ✔✔the owner's claim on assets, has two parts: -contributed capital
-retained earnings
Contributed Capital - ✔✔amount that stockholders invest in the company included under common stock
Retained Earnings - ✔✔refer to income (revenues less expenses) that has not been distributed to its
stockholders
net income - cash dividends = retained earnings
Dividends - ✔✔distribution of assets to stockholders
Revenues - ✔✔Increase retained earnings and are resources generated from a company's earnings
activities
Expenses - ✔✔decrease retained earnings and are the cost of assets or services used to earn revenues
Accounting Equation (full and complicated) - ✔✔Assets = liabilities + Equity [contributed capital +
retained earnings]
Assets = liabilities + common stock + retained earnings [- dividends + revenue - expenses]
Net Income - ✔✔when revenues exceed expenses (increase equity)
revenue - expenses
Net loss - ✔✔when expenses exceed revenues (decrease equity)
