Page | 1
Financial Accounting Mid-Term
Questions with Detailed Verified
Answers
Question: Cash Accounting
Answer: private firms and partnerships use cash accounting
Question:accrual accounting
Answer: public firms use this
Question:Cash Accounting
Answer: want to recognize an expense in a single year and not spread it out
Question:accrual
Answer: want to recognize expense over the it's life
Question:net income
Answer: how did the company perform
Question:balance sheet
Answer: What a company owns (assets) and how it paid for what it owns
(liabilities and equity)
Reports the company's financial position at a point in time
, Page | 2
Question:Income Statement
Answer: Measures profitability (e.g., performance) or net income over a
period of time
Question:Cash flow statement
Answer: Reports the amount of cash inflows and outflows from operating,
investing, and financing activities over a period of time
Question:Balance Sheet Equation (BSE)
Answer: assets = liabilities + shareholders equity
Question:Statement of Stockholders' Equity
Answer: Tracks changes in stockholders' investments over a period of time
Question:assets
Answer: what does the company own (ex your house)
Question:asset requirements
Answer: 1.Right of ownership, result of a past transaction
2.Associated with future benefits
3.Measurable with reasonable accuracy
Question:Liabilities requirements
Answer: 1.Result of past transaction
2.Involves future obligation - cash, good or service
3.Measurable with reasonable accuracy
, Page | 3
Question:liabilties
Answer: own (your loan balance)
how much does the company owe
Question:shareholders equity
Answer: owners' share of the business
-net worth
-book value, residual claim
Question:Shareholder equity
Answer: Shareholders are the residual claimant to the firm's assets
We divide their rights (or investment) into:
(a) contributed capital, and
(b) retained earnings
Question:Contributed capital
Answer: arises from the issuance of stock
Question:contributed capital
Answer: how much capital have shareholders invested?
Question:Retained Earnings
Answer: are profits that have not been distributed as dividends
Question:net income=
Financial Accounting Mid-Term
Questions with Detailed Verified
Answers
Question: Cash Accounting
Answer: private firms and partnerships use cash accounting
Question:accrual accounting
Answer: public firms use this
Question:Cash Accounting
Answer: want to recognize an expense in a single year and not spread it out
Question:accrual
Answer: want to recognize expense over the it's life
Question:net income
Answer: how did the company perform
Question:balance sheet
Answer: What a company owns (assets) and how it paid for what it owns
(liabilities and equity)
Reports the company's financial position at a point in time
, Page | 2
Question:Income Statement
Answer: Measures profitability (e.g., performance) or net income over a
period of time
Question:Cash flow statement
Answer: Reports the amount of cash inflows and outflows from operating,
investing, and financing activities over a period of time
Question:Balance Sheet Equation (BSE)
Answer: assets = liabilities + shareholders equity
Question:Statement of Stockholders' Equity
Answer: Tracks changes in stockholders' investments over a period of time
Question:assets
Answer: what does the company own (ex your house)
Question:asset requirements
Answer: 1.Right of ownership, result of a past transaction
2.Associated with future benefits
3.Measurable with reasonable accuracy
Question:Liabilities requirements
Answer: 1.Result of past transaction
2.Involves future obligation - cash, good or service
3.Measurable with reasonable accuracy
, Page | 3
Question:liabilties
Answer: own (your loan balance)
how much does the company owe
Question:shareholders equity
Answer: owners' share of the business
-net worth
-book value, residual claim
Question:Shareholder equity
Answer: Shareholders are the residual claimant to the firm's assets
We divide their rights (or investment) into:
(a) contributed capital, and
(b) retained earnings
Question:Contributed capital
Answer: arises from the issuance of stock
Question:contributed capital
Answer: how much capital have shareholders invested?
Question:Retained Earnings
Answer: are profits that have not been distributed as dividends
Question:net income=
