A201 Financial Accounting Exam 1
Questions and Answers 100% Solved
An equity account representing capital from profitable operations -
✔✔Retained Earnings
Operating Cash Flows - ✔✔operating cash flows,
examples: salary expense, rent expense, insurance expense, inventory,
utilities expense, sales, unearned revenue, wages expense, interest
expense
________ and ________ are not recorded on the statement of cash flows -
✔✔accounts receivable; accounts payable
financing cash flows - ✔✔transactions with stockholders and bankers,
excludes interest,
examples: issue common stock, contributed capital, dividends, company
borrow money, pay back principal to bank, note payable
investing cash flows - ✔✔buying and selling land, buildings, and equipment
examples: buying/selling fixed assets, selling land, buildings, equipment
1
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
, Purchasing inventory on credit/account would affect which financial
statement? - ✔✔balance sheet
Accrual accounting requires that wages owed to employees at the end of
the month are to ... - ✔✔be recorded as an expense in the month in which
they worked, regardless of if they're not yet paid
Marketable securities fall under which category on the balance sheet? -
✔✔Assets
economic entity assumption says that - ✔✔the information on the
company's financial statement does not include the shareholders' personal
assets and liabilities
the going concern assumption says that - ✔✔a business will continue
indefinitely in the future
the stable dollar assumption says that - ✔✔the reports will be in US dollars
and it is stable
the fiscal period assumption says that - ✔✔the statements are broken up
into time periods
the measurement principle (objectivity) - ✔✔measures items on balance
sheets
(agree on all, can have different values for each category)
2
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
Questions and Answers 100% Solved
An equity account representing capital from profitable operations -
✔✔Retained Earnings
Operating Cash Flows - ✔✔operating cash flows,
examples: salary expense, rent expense, insurance expense, inventory,
utilities expense, sales, unearned revenue, wages expense, interest
expense
________ and ________ are not recorded on the statement of cash flows -
✔✔accounts receivable; accounts payable
financing cash flows - ✔✔transactions with stockholders and bankers,
excludes interest,
examples: issue common stock, contributed capital, dividends, company
borrow money, pay back principal to bank, note payable
investing cash flows - ✔✔buying and selling land, buildings, and equipment
examples: buying/selling fixed assets, selling land, buildings, equipment
1
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
, Purchasing inventory on credit/account would affect which financial
statement? - ✔✔balance sheet
Accrual accounting requires that wages owed to employees at the end of
the month are to ... - ✔✔be recorded as an expense in the month in which
they worked, regardless of if they're not yet paid
Marketable securities fall under which category on the balance sheet? -
✔✔Assets
economic entity assumption says that - ✔✔the information on the
company's financial statement does not include the shareholders' personal
assets and liabilities
the going concern assumption says that - ✔✔a business will continue
indefinitely in the future
the stable dollar assumption says that - ✔✔the reports will be in US dollars
and it is stable
the fiscal period assumption says that - ✔✔the statements are broken up
into time periods
the measurement principle (objectivity) - ✔✔measures items on balance
sheets
(agree on all, can have different values for each category)
2
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
