FINANCIAL ACCOUNTING EXAM WITH
CORRECT ANSWERS 2025
1. The financial reports of a business are assumed to include the results
of only the business's activities - CORRECT-ANSWERS- Separate
Entity Assumption
2. The amount of resources that a company sacrifices to obtain goods or
services; often said to be incurred when the company pays cash or
uses credit to acquire the item - CORRECT-ANSWERS- Cost
3. revenues are reported when goods or services are delivered, there is
evidence of an arrangement for customer payment, the price is fixed
or determinable, and collection is reasonably assured - CORRECT-
ANSWERS- Revenue Recognition Principle
4. expenses are recorded when incurred in earning revenue; also called
"matching" - CORRECT-ANSWERS- Expense Recognition Principle
5. records revenues when they are earned and expenses in the same
period as the revenues to which they relate, regardless of the timing of
cash receipts or payments - CORRECT-ANSWERS- Accrual Basis
Accounting
6. entries necessary at the end of each accounting period to measure all
revenues and expenses of that period - CORRECT-ANSWERS-
Adjusting Journal Entries
7. an account that is an offset to, or reduction of, another account -
CORRECT-ANSWERS- Contra Account
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, 8. the amount at which an asset or liability is reported ("carried") in the
financial statements; also known as "net book value" or "book value" -
CORRECT-ANSWERS- Carrying Value
9. the distribution of a company's earnings to its stockholders' as a return
on their investment; not an expense! - CORRECT-ANSWERS-
Dividends
10. accounts that track financial results from year to year by carrying
their ending balances into the next year - CORRECT-ANSWERS-
Permanent Accounts
11. accounts that track financial results for a limited period of time
by having their balances zeroed out at the end of each accounting year
- CORRECT-ANSWERS- Temporary Accounts
12. a simplified version of a ledger account used for summarizing the
effects of journal entries - CORRECT-ANSWERS- T-accounts
13. made at the end of the accounting period to transfer balances in
temporary accounts to Retained Earnings and to establish a zero
balance in each of the temporary accounts - CORRECT-ANSWERS-
Closing Entries
14. R-E=NI; revenues-expenses=net income - CORRECT-ANSWERS-
Income Statement
15. A=L+SE; assets=liabilities+stockholders' equity - CORRECT-
ANSWERS- Balance Sheet
2
CORRECT ANSWERS 2025
1. The financial reports of a business are assumed to include the results
of only the business's activities - CORRECT-ANSWERS- Separate
Entity Assumption
2. The amount of resources that a company sacrifices to obtain goods or
services; often said to be incurred when the company pays cash or
uses credit to acquire the item - CORRECT-ANSWERS- Cost
3. revenues are reported when goods or services are delivered, there is
evidence of an arrangement for customer payment, the price is fixed
or determinable, and collection is reasonably assured - CORRECT-
ANSWERS- Revenue Recognition Principle
4. expenses are recorded when incurred in earning revenue; also called
"matching" - CORRECT-ANSWERS- Expense Recognition Principle
5. records revenues when they are earned and expenses in the same
period as the revenues to which they relate, regardless of the timing of
cash receipts or payments - CORRECT-ANSWERS- Accrual Basis
Accounting
6. entries necessary at the end of each accounting period to measure all
revenues and expenses of that period - CORRECT-ANSWERS-
Adjusting Journal Entries
7. an account that is an offset to, or reduction of, another account -
CORRECT-ANSWERS- Contra Account
1
, 8. the amount at which an asset or liability is reported ("carried") in the
financial statements; also known as "net book value" or "book value" -
CORRECT-ANSWERS- Carrying Value
9. the distribution of a company's earnings to its stockholders' as a return
on their investment; not an expense! - CORRECT-ANSWERS-
Dividends
10. accounts that track financial results from year to year by carrying
their ending balances into the next year - CORRECT-ANSWERS-
Permanent Accounts
11. accounts that track financial results for a limited period of time
by having their balances zeroed out at the end of each accounting year
- CORRECT-ANSWERS- Temporary Accounts
12. a simplified version of a ledger account used for summarizing the
effects of journal entries - CORRECT-ANSWERS- T-accounts
13. made at the end of the accounting period to transfer balances in
temporary accounts to Retained Earnings and to establish a zero
balance in each of the temporary accounts - CORRECT-ANSWERS-
Closing Entries
14. R-E=NI; revenues-expenses=net income - CORRECT-ANSWERS-
Income Statement
15. A=L+SE; assets=liabilities+stockholders' equity - CORRECT-
ANSWERS- Balance Sheet
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