Bus 2000 FINAL EXAM questions and
answers A+ rated passed
What Is Accounting - correct answer ✔✔simply stated.... "Accounting is the language of
business."
Accounting - correct answer ✔✔The recording, classifying, summarizing, and interpreting of
financial events and transactions to provide management and others interested the information
they need to make good decisions.
Outside parties - correct answer ✔✔such as employees, owners, creditors, unions, investors,
and the government—make extensive use of a firm's detailed accounting information.
Accounting Cycle - correct answer ✔✔A six-step procedure that results in the preparation and
analysis of the major financial statements.
Bookkeeping - correct answer ✔✔The recording of business transactions. Bookkeepers divide a
firm's transactions into meaningful categories and then posting them into a record book or
computer program which is called a Journal.
Financial Statement - correct answer ✔✔A summary of all the transactions that have occurred
over a particular period of time (3 months; 6 months, 12 months)
1. Balance Sheet - correct answer ✔✔Financial statement that reports a firm's financial
condition at a specific time and is composed of three major accounts: assets, liabilities, and
owner's equity.
,2. Income Statement - correct answer ✔✔The financial statement that shows a firm's profit
after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm
(revenue), all the resources that have left the firm, expenses, and the resulting net income or
net loss.
3. Statement of Cash Flows - correct answer ✔✔Financial statement that reports cash receipts
and disbursements related to a firm's three major activities
Fundamental accounting equation - correct answer ✔✔The basis for the balance sheet. The
equation must always be balanced and includes the formula: Assets = Liabilities + Owners Equity
---OR--- Assets minus Liabilities = Owners Equity Classifying Assets
Assets - correct answer ✔✔Economic resources (things of value) owned by a firm; items can be
tangible or intangible.
Liquidity - correct answer ✔✔The ease with which an asset can be converted into cash. (in
reality, some assets are highly illiquid and cannot easily be turned into cash at all (for example,
an outdated and rundown warehouse building situated in a remote location)
Current Assets - correct answer ✔✔Items that can or will be converted into cash within one
year.
Fixed Assets - correct answer ✔✔Assets that are relatively permanent, such as land, buildings,
and equipment.
Intangible Assets - correct answer ✔✔Long-term assets (e.g., patents, trademarks, copyrights)
that have no physical form but do have value.
Liabilities - correct answer ✔✔What the business owes to others (debts)
, Accounts Payable - correct answer ✔✔Current liabilities involving money owed to others for
merchandise or services purchased on credit but not yet paid for.
Owners' Equity - correct answer ✔✔The amount of the business that belongs to the owners
minus any liabilities owed by the business.
Retained Earnings - correct answer ✔✔The accumulated earnings from a firm's profitable
operations that were reinvested in the business and not paid out to stockholders in dividends.
Net Income or Net Loss - correct answer ✔✔Revenue left over after all costs and expenses,
including taxes, are paid. If none exists, then the firm has suffered a loss.
The formula for the income statement is - correct answer ✔✔REVENUE minus Cost of goods
sold minus Gross profit (gross margin) minus Operating expenses= Net income before taxes
minus Taxes = Net Income or Net Loss
Revenue - correct answer ✔✔is the monetary value a firm received for goods sold, services
rendered, or other payments.
Cost of goods sold (or manufactured) - correct answer ✔✔A measure of the cost of
merchandise sold or the cost of raw materials and supplies used for producing items for resale.
Gross Profit (or Gross Margin) - correct answer ✔✔How much a firm earned by buying (or
making) and selling merchandise.
Operating Expenses - correct answer ✔✔Costs involved in operating a business, such as rent,
utilities, and salaries.
answers A+ rated passed
What Is Accounting - correct answer ✔✔simply stated.... "Accounting is the language of
business."
Accounting - correct answer ✔✔The recording, classifying, summarizing, and interpreting of
financial events and transactions to provide management and others interested the information
they need to make good decisions.
Outside parties - correct answer ✔✔such as employees, owners, creditors, unions, investors,
and the government—make extensive use of a firm's detailed accounting information.
Accounting Cycle - correct answer ✔✔A six-step procedure that results in the preparation and
analysis of the major financial statements.
Bookkeeping - correct answer ✔✔The recording of business transactions. Bookkeepers divide a
firm's transactions into meaningful categories and then posting them into a record book or
computer program which is called a Journal.
Financial Statement - correct answer ✔✔A summary of all the transactions that have occurred
over a particular period of time (3 months; 6 months, 12 months)
1. Balance Sheet - correct answer ✔✔Financial statement that reports a firm's financial
condition at a specific time and is composed of three major accounts: assets, liabilities, and
owner's equity.
,2. Income Statement - correct answer ✔✔The financial statement that shows a firm's profit
after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm
(revenue), all the resources that have left the firm, expenses, and the resulting net income or
net loss.
3. Statement of Cash Flows - correct answer ✔✔Financial statement that reports cash receipts
and disbursements related to a firm's three major activities
Fundamental accounting equation - correct answer ✔✔The basis for the balance sheet. The
equation must always be balanced and includes the formula: Assets = Liabilities + Owners Equity
---OR--- Assets minus Liabilities = Owners Equity Classifying Assets
Assets - correct answer ✔✔Economic resources (things of value) owned by a firm; items can be
tangible or intangible.
Liquidity - correct answer ✔✔The ease with which an asset can be converted into cash. (in
reality, some assets are highly illiquid and cannot easily be turned into cash at all (for example,
an outdated and rundown warehouse building situated in a remote location)
Current Assets - correct answer ✔✔Items that can or will be converted into cash within one
year.
Fixed Assets - correct answer ✔✔Assets that are relatively permanent, such as land, buildings,
and equipment.
Intangible Assets - correct answer ✔✔Long-term assets (e.g., patents, trademarks, copyrights)
that have no physical form but do have value.
Liabilities - correct answer ✔✔What the business owes to others (debts)
, Accounts Payable - correct answer ✔✔Current liabilities involving money owed to others for
merchandise or services purchased on credit but not yet paid for.
Owners' Equity - correct answer ✔✔The amount of the business that belongs to the owners
minus any liabilities owed by the business.
Retained Earnings - correct answer ✔✔The accumulated earnings from a firm's profitable
operations that were reinvested in the business and not paid out to stockholders in dividends.
Net Income or Net Loss - correct answer ✔✔Revenue left over after all costs and expenses,
including taxes, are paid. If none exists, then the firm has suffered a loss.
The formula for the income statement is - correct answer ✔✔REVENUE minus Cost of goods
sold minus Gross profit (gross margin) minus Operating expenses= Net income before taxes
minus Taxes = Net Income or Net Loss
Revenue - correct answer ✔✔is the monetary value a firm received for goods sold, services
rendered, or other payments.
Cost of goods sold (or manufactured) - correct answer ✔✔A measure of the cost of
merchandise sold or the cost of raw materials and supplies used for producing items for resale.
Gross Profit (or Gross Margin) - correct answer ✔✔How much a firm earned by buying (or
making) and selling merchandise.
Operating Expenses - correct answer ✔✔Costs involved in operating a business, such as rent,
utilities, and salaries.
