FINANCIAL ACCOUNTING IVY SOFTWARE EXAM QUESTIONS WITH CORRECT ANSWERS

FINANCIAL ACCOUNTING IVY SOFTWARE EXAM QUESTIONS WITH
CORRECT ANSWERS

materiality - ✔✔ if an item is not large enough to influence the users of a financial statement, it
should not be reported



cost effectiveness - ✔✔ benefits of providing a certain level of accounting information must
outweigh the costs



balance sheet - ✔✔ financial position at a point in time



income statement - ✔✔ earnings and comprehensive income for a period



statement of retained earnings - ✔✔ distribution to owners during a period



accounting equation- relationship between assets, liabilities, and owners' equity - ✔✔ Assets (A)
= Liabilities (L) + Owners' Equity (OE)

L = A - OE

OE = A - L



accounting conventions (i.e., materiality, going concern, etc.) dictate... - ✔✔ categories on
balance sheet



Balance Sheet Categories - ✔✔ Assets (current & non-current)

Liabilities (current & non-current)

, Owners' equity



Current Assets in order - ✔✔ Cash

Accounts Receivable

Inventory

Prepaid Expenses



Non-Current assets in order - ✔✔ Investment

Equipment

Buildings

Land

Less: Accumulated Depreciation



Current Liabilities in order - ✔✔ Accounts Payable

Notes Payable

Salaries Payable

Taxes Payable



Non-Current liabilities in order - ✔✔ Bank Loan Payable



Owners' Equity in order - ✔✔ Capital Stock

Retained Earnings