ACTG223 EXAM 1 ACTUAL QUESTIONS AND ACCURATE
ANSWERS
Source Documents - CORRECT ANSWER✅✅✅what do accountants use to provide
evidence and data for recording transactions
Normal balance - CORRECT ANSWER✅✅✅the balance that appears on the increase side
of an account
what is the flow of accounting data - CORRECT ANSWER✅✅✅transactions occur; source
documents are prepared; transactions are analyzed; transactions are journalized and posted
how do you increase/decrease assets - CORRECT ANSWER✅✅✅debit to increase, credit to
decrease
How do you increase/ decrease liabilties and Equity - CORRECT ANSWER✅✅✅credit to
increase, debit to decrease
what are the four types of financial statements - CORRECT ANSWER✅✅✅1. Income
Statement
2. Statement of Retained Earnings
3. Balance Sheet
4. Statement of Cash Flows
When is the income statement equation - CORRECT ANSWER✅✅✅Revenues - Expenses=
net income
statement of retained earnings equation - CORRECT ANSWER✅✅✅Beginning Retained
Earnings + Net Income - Dividends = Ending Retained Earnings
, how is the balance sheet set up - CORRECT ANSWER✅✅✅assets and cash on the left
(debit) side. liabilities, equity, paid in capitol, and retained earning on the right (credit) side
statement of cash flows equation - CORRECT ANSWER✅✅✅beg
retained earnings equation - CORRECT ANSWER✅✅✅revenue - expenses - dividends =
retained earnings
equity formula - CORRECT ANSWER✅✅✅paid in capitol+retained earnings
prepaid expenses are a: - CORRECT ANSWER✅✅✅asset
Unearned revenue is - CORRECT ANSWER✅✅✅a liability
define unearned revenue - CORRECT ANSWER✅✅✅A liability created when a business
collects cash from customers in advance of providing services or delivering goods.
define prepaid expense - CORRECT ANSWER✅✅✅an expense paid for ahead of time but
the benefits of payment have not been received yet
example: insurance
what is trail balance / the order of accounts - CORRECT ANSWER✅✅✅list of all ledger
accounts with their balances at a point in time; assets, liabilities, equity
what are the two types of accounting - CORRECT ANSWER✅✅✅Accrual and cash basis
What is accrual basis accounting? - CORRECT ANSWER✅✅✅revenues are recognized
when earned and expenses are recognized when incurred
ANSWERS
Source Documents - CORRECT ANSWER✅✅✅what do accountants use to provide
evidence and data for recording transactions
Normal balance - CORRECT ANSWER✅✅✅the balance that appears on the increase side
of an account
what is the flow of accounting data - CORRECT ANSWER✅✅✅transactions occur; source
documents are prepared; transactions are analyzed; transactions are journalized and posted
how do you increase/decrease assets - CORRECT ANSWER✅✅✅debit to increase, credit to
decrease
How do you increase/ decrease liabilties and Equity - CORRECT ANSWER✅✅✅credit to
increase, debit to decrease
what are the four types of financial statements - CORRECT ANSWER✅✅✅1. Income
Statement
2. Statement of Retained Earnings
3. Balance Sheet
4. Statement of Cash Flows
When is the income statement equation - CORRECT ANSWER✅✅✅Revenues - Expenses=
net income
statement of retained earnings equation - CORRECT ANSWER✅✅✅Beginning Retained
Earnings + Net Income - Dividends = Ending Retained Earnings
, how is the balance sheet set up - CORRECT ANSWER✅✅✅assets and cash on the left
(debit) side. liabilities, equity, paid in capitol, and retained earning on the right (credit) side
statement of cash flows equation - CORRECT ANSWER✅✅✅beg
retained earnings equation - CORRECT ANSWER✅✅✅revenue - expenses - dividends =
retained earnings
equity formula - CORRECT ANSWER✅✅✅paid in capitol+retained earnings
prepaid expenses are a: - CORRECT ANSWER✅✅✅asset
Unearned revenue is - CORRECT ANSWER✅✅✅a liability
define unearned revenue - CORRECT ANSWER✅✅✅A liability created when a business
collects cash from customers in advance of providing services or delivering goods.
define prepaid expense - CORRECT ANSWER✅✅✅an expense paid for ahead of time but
the benefits of payment have not been received yet
example: insurance
what is trail balance / the order of accounts - CORRECT ANSWER✅✅✅list of all ledger
accounts with their balances at a point in time; assets, liabilities, equity
what are the two types of accounting - CORRECT ANSWER✅✅✅Accrual and cash basis
What is accrual basis accounting? - CORRECT ANSWER✅✅✅revenues are recognized
when earned and expenses are recognized when incurred
