Module #3 - Final Exam
What is the essential accounting equation? - answer Assets = Liabilities + Equity
What is the conflict of interest for accounting firms? - answer They get paid to do
accounting but they also must be ethical
What are the two types of accountants? - answer Public and Private
What is a managerial accounting report? - answer Internal report used to report about
the operating performance
What is a financial accounting report? - answer Prepared periodically for people not
employed by the company
Who is money owed to? - answer Creditors
What is an asset? - answer Economic resource presently controlled by the company
What is a liability? - answer Measurable amounts that the company owes to creditors
What is the stockholder's equity - answer Represents the owners' claim on the business
What is a dividend? - answer Profits paid out to stockholders from retained earnings
What does the income statement report? - answer The amount of revenues minus the
expenses for a period of time
What are the three sections to an income statement? - answer Revenues, Expenses,
Net Income
What are the components to the statement of retained earnings? – answer RE balance
at the start of the period
Add Net Income
Subtract any Dividends
RE at the end of the period
What is the purpose of the balance sheet? - answer Reports the amount of assets,
liabilities, and stockholder's equity (A=L+E)
How are assets ordered on a balance sheet? - answer In order of liquidity (Cash first)
What is the essential accounting equation? - answer Assets = Liabilities + Equity
What is the conflict of interest for accounting firms? - answer They get paid to do
accounting but they also must be ethical
What are the two types of accountants? - answer Public and Private
What is a managerial accounting report? - answer Internal report used to report about
the operating performance
What is a financial accounting report? - answer Prepared periodically for people not
employed by the company
Who is money owed to? - answer Creditors
What is an asset? - answer Economic resource presently controlled by the company
What is a liability? - answer Measurable amounts that the company owes to creditors
What is the stockholder's equity - answer Represents the owners' claim on the business
What is a dividend? - answer Profits paid out to stockholders from retained earnings
What does the income statement report? - answer The amount of revenues minus the
expenses for a period of time
What are the three sections to an income statement? - answer Revenues, Expenses,
Net Income
What are the components to the statement of retained earnings? – answer RE balance
at the start of the period
Add Net Income
Subtract any Dividends
RE at the end of the period
What is the purpose of the balance sheet? - answer Reports the amount of assets,
liabilities, and stockholder's equity (A=L+E)
How are assets ordered on a balance sheet? - answer In order of liquidity (Cash first)
