©THEBRIGHT EXAM SOLUTIONS
11/7/2024 12:35 PM
WSU Accounting 230 Exam Questions With
Correct Answers
Two primary functions of financial accounting - answer✔1) Measure business transactions
2) Communicate those measurements to people to make decisions
Three objectives of financial accounting - answer✔1) Measure the relevant transactions of a
company
2) Communicate these business activities to outside to company
3)
GAAP - answer✔The rules of financial accounting in the US set by FASB
Three types of business activites - answer✔1) Operating: relate to earning revenues and
incurring expenses
2) Investing: generally include the purchase or disposal of productive assets and investments
3) Financing: include transactions with lenders and owners
Three forms of business - answer✔1) Sole proprietorship: owned by single person (personally
responsible and lower taxes)
2) Partnership: owned by two or more people (personally responsible and lower taxes)
3) Corporation: legally separate from its owners (limited liability/not personally responsible)
Four primary financial statements - answer✔1) Income Statement
2) Statement of Stockholder's Equity
3) Balance Sheet
4) Statement of Cash Flows
, ©THEBRIGHT EXAM SOLUTIONS
11/7/2024 12:35 PM
Income statement - answer✔Revenues - Expenses = Net Income
Statement of Stockholder's Equity - answer✔Common Stock: beginning + issuances + Retained
Earnings: beginning + net income -
dividends = S. E.
Balance Sheet - answer✔Assets = Liabilities + Stockholders Equity
Statement of Cashflow - answer✔Operating + Investing + Financing = Total Cash Flows
Time periods represent by each financial statement - answer✔Income statement: current
period
Statement of S.E.: for each period
Balance Sheet: particular date
Statement of Cash Flows: for the period
How are the financial statements connected?? - answer✔Income statement has net income
which is apart of R.E. in the statement of S.E. The S.E. is used in the balance sheet and the cash
from assets in the balance sheet are the results of the statement of cash flows
Main two organizations involved with standard settings - answer✔FASB and IASB
Accounting equation - answer✔Assets = Liabilities + Stockholder's Equity
The effect of transactions on the expanded accounting equation - answer✔Revenue increases
retained earnings while expenses and dividends decreases retained earnings. R.E. is a
component of S.E.
Six steps of analyzing transactions - answer✔1) Use source documents to identify accounts
affected by an external transaction
2) Analyze the impact of the transaction on the accounting equation
3) Assess whether the transaction results in a debit or a credit to the account balance
4) Record the transaction in a journal
5) Post the transaction to the T-account in the general ledger
6) Prepare a trial balance
Debits & Credits - answer✔Debit accounts: Dividends, Expenses, Assets
11/7/2024 12:35 PM
WSU Accounting 230 Exam Questions With
Correct Answers
Two primary functions of financial accounting - answer✔1) Measure business transactions
2) Communicate those measurements to people to make decisions
Three objectives of financial accounting - answer✔1) Measure the relevant transactions of a
company
2) Communicate these business activities to outside to company
3)
GAAP - answer✔The rules of financial accounting in the US set by FASB
Three types of business activites - answer✔1) Operating: relate to earning revenues and
incurring expenses
2) Investing: generally include the purchase or disposal of productive assets and investments
3) Financing: include transactions with lenders and owners
Three forms of business - answer✔1) Sole proprietorship: owned by single person (personally
responsible and lower taxes)
2) Partnership: owned by two or more people (personally responsible and lower taxes)
3) Corporation: legally separate from its owners (limited liability/not personally responsible)
Four primary financial statements - answer✔1) Income Statement
2) Statement of Stockholder's Equity
3) Balance Sheet
4) Statement of Cash Flows
, ©THEBRIGHT EXAM SOLUTIONS
11/7/2024 12:35 PM
Income statement - answer✔Revenues - Expenses = Net Income
Statement of Stockholder's Equity - answer✔Common Stock: beginning + issuances + Retained
Earnings: beginning + net income -
dividends = S. E.
Balance Sheet - answer✔Assets = Liabilities + Stockholders Equity
Statement of Cashflow - answer✔Operating + Investing + Financing = Total Cash Flows
Time periods represent by each financial statement - answer✔Income statement: current
period
Statement of S.E.: for each period
Balance Sheet: particular date
Statement of Cash Flows: for the period
How are the financial statements connected?? - answer✔Income statement has net income
which is apart of R.E. in the statement of S.E. The S.E. is used in the balance sheet and the cash
from assets in the balance sheet are the results of the statement of cash flows
Main two organizations involved with standard settings - answer✔FASB and IASB
Accounting equation - answer✔Assets = Liabilities + Stockholder's Equity
The effect of transactions on the expanded accounting equation - answer✔Revenue increases
retained earnings while expenses and dividends decreases retained earnings. R.E. is a
component of S.E.
Six steps of analyzing transactions - answer✔1) Use source documents to identify accounts
affected by an external transaction
2) Analyze the impact of the transaction on the accounting equation
3) Assess whether the transaction results in a debit or a credit to the account balance
4) Record the transaction in a journal
5) Post the transaction to the T-account in the general ledger
6) Prepare a trial balance
Debits & Credits - answer✔Debit accounts: Dividends, Expenses, Assets
