Financial Accounting Exam 1 Review Guide
Questions And Answers
Principles Put in place so everyone does things the same way
Revenue Recognition Principle Recognize revenue when earned (service is performed)
Matching Principal Company must record its expenses incurred to generate the revenue
reported
Full Disclosure Principal Company required to report details of financial statements
Going Concern Assumption Business will continue running
Monetary Unit Assumption Business is measured in monetary units
Time Period Assumption Life of companies can be divided into time period
, Financial Accounting Exam 1 Review Guide
Questions And Answers
Business Entity Assumption means that a business is accounted for separately from other
business entities, including its owner
Balance Sheet Assets=Liabilities+Equity
Income Statement Revenue-Expenses= Net Income
Statement of retained earnings Balance beginning + Net Income - Dividends = Retained
Earnings
Statement of Cash Flow Identifies cash inflows (receipts) and cash outflows (payments)
over a period of time.
Invest Cash and Equipment for Common Stock Debit Cash
Debit Equipment
Credit Common Stock
Pay Cash for Insurance Premium Debit Prepaid Insurance
Questions And Answers
Principles Put in place so everyone does things the same way
Revenue Recognition Principle Recognize revenue when earned (service is performed)
Matching Principal Company must record its expenses incurred to generate the revenue
reported
Full Disclosure Principal Company required to report details of financial statements
Going Concern Assumption Business will continue running
Monetary Unit Assumption Business is measured in monetary units
Time Period Assumption Life of companies can be divided into time period
, Financial Accounting Exam 1 Review Guide
Questions And Answers
Business Entity Assumption means that a business is accounted for separately from other
business entities, including its owner
Balance Sheet Assets=Liabilities+Equity
Income Statement Revenue-Expenses= Net Income
Statement of retained earnings Balance beginning + Net Income - Dividends = Retained
Earnings
Statement of Cash Flow Identifies cash inflows (receipts) and cash outflows (payments)
over a period of time.
Invest Cash and Equipment for Common Stock Debit Cash
Debit Equipment
Credit Common Stock
Pay Cash for Insurance Premium Debit Prepaid Insurance
