Financial Accounting First Exam Questions And Answers

Financial Accounting First Exam Questions
And Answers

Financial Accounting Provides info for external users: Investors, creditors, government,

the public




Managerial Accounting Provides info for internal users-managers. Includes budgets and

forecasts




Proprietorship Proprietor is one owner, personally liable




Partnership Two owners, both personally liable




LLC Multiple owners, members aren't personally liable




Corporations Stockholders, Stockholders aren't personally liable.




Entity Assumptions A business is a separate economic unit. Only include transactions of

business.

, Financial Accounting First Exam Questions
And Answers
Continuity(Going-Concern) Assumption Entity will continue to exist indefinitely.




Historical Cost Principle Assets recorded at purchase price. You can verify it when you

first bought.




Stable monetary unit Assumption US dollar




International Financial Reporting Standards (IFRS) Every other country but the US uses




Accounting Equation A=L+E




Assets Cash and Cash Equivalents


Merchandise Inventory

Property, plant, equipment




Liabilities Accounts payable


Income taxes payable

, Financial Accounting First Exam Questions
And Answers
Notes payable




Retained Earnings Revenues


Expenses

Dividends




Revenues Inflows of resources earned by delivering goods and services to customers




Expenses Resources outflows form the cost of doing business




Dividends Distributions of assets to stockholders. Money which you get back from the

company. Decreases retained earnings.




Beg RE + NI - DIV = End RE ...




Net income Revenue minus Expenses


*If expenses exceed revenues a net loss results