PACE exam questions with complete
correct solutions
what are assests - ANS ✔resources controlled by company
basic elements of balance sheet - ANS ✔assests
liabilities
stockholder equity
sole proprietorship - ANS ✔1 person owning company
partnership - ANS ✔2 or more owners
corporation - ANS ✔separate entityfrom legeal and accounting perspective
accounting equation - ANS ✔A=L+SE
how are debits and credits displayed - ANS ✔DR on left and CR on right
expenses - ANS ✔all cost of doing business that are necessary to earn revenue
purpose of retained earnings - ANS ✔reports the way net income and distribution of dividends
affect financial position
retained earning formula - ANS ✔beg RE + NI - DIVIDENDS=end RE
,headings of financial statements contain - ANS ✔COMPANY NAME
TYPE OF STATEMENT
DATE
cash flows - ANS ✔Financing
Investing
Opertating
operating - ANS ✔running the business; short term asset
change asset and liabilities
investing - ANS ✔buying and selling resources; long term asset
financing - ANS ✔borrowing from banks ; long term liability; stocks and bonds
dividends - ANS ✔distribution of earnings
revenue - ANS ✔selling goods or services to customers
internal controls purposes - ANS ✔methods company use to protect against THEFT, enhance
RELIABILITY, promote EFFICIENCY, ensure COMPLIANCE WITH LAWS
separation of duties - ANS ✔each person assigned to specific job
internal controls - ANS ✔ensure accuracy in accounting reports
, interest formula - ANS ✔(P*R*T) principal, rate, time
current assests - ANS ✔assests the busniess will use up or turn into cash within 12 months
current liability - ANS ✔debts and other obligations that will be paid or fulfilled within 12
months
matching principle - ANS ✔cost of employee wages is recorded in the same period that the
employees work to generate revenue for the company
adjusting entries are made to... - ANS ✔retained revenue and expenses that have not been
recorded but belong in current period
accured expense - ANS ✔expense have been incurred but not paid
accured revenue - ANS ✔revenue that been earned but not collected
permanent accounts - ANS ✔balance sheet accounts (A, L, SE)
not closed at end of each period
temporary accounts - ANS ✔income statement accounts (Revenues, Expenses, Dividends
Declared)
are closed at end of each period
general ledger - ANS ✔summarizes effects of journal entries on each account
correct solutions
what are assests - ANS ✔resources controlled by company
basic elements of balance sheet - ANS ✔assests
liabilities
stockholder equity
sole proprietorship - ANS ✔1 person owning company
partnership - ANS ✔2 or more owners
corporation - ANS ✔separate entityfrom legeal and accounting perspective
accounting equation - ANS ✔A=L+SE
how are debits and credits displayed - ANS ✔DR on left and CR on right
expenses - ANS ✔all cost of doing business that are necessary to earn revenue
purpose of retained earnings - ANS ✔reports the way net income and distribution of dividends
affect financial position
retained earning formula - ANS ✔beg RE + NI - DIVIDENDS=end RE
,headings of financial statements contain - ANS ✔COMPANY NAME
TYPE OF STATEMENT
DATE
cash flows - ANS ✔Financing
Investing
Opertating
operating - ANS ✔running the business; short term asset
change asset and liabilities
investing - ANS ✔buying and selling resources; long term asset
financing - ANS ✔borrowing from banks ; long term liability; stocks and bonds
dividends - ANS ✔distribution of earnings
revenue - ANS ✔selling goods or services to customers
internal controls purposes - ANS ✔methods company use to protect against THEFT, enhance
RELIABILITY, promote EFFICIENCY, ensure COMPLIANCE WITH LAWS
separation of duties - ANS ✔each person assigned to specific job
internal controls - ANS ✔ensure accuracy in accounting reports
, interest formula - ANS ✔(P*R*T) principal, rate, time
current assests - ANS ✔assests the busniess will use up or turn into cash within 12 months
current liability - ANS ✔debts and other obligations that will be paid or fulfilled within 12
months
matching principle - ANS ✔cost of employee wages is recorded in the same period that the
employees work to generate revenue for the company
adjusting entries are made to... - ANS ✔retained revenue and expenses that have not been
recorded but belong in current period
accured expense - ANS ✔expense have been incurred but not paid
accured revenue - ANS ✔revenue that been earned but not collected
permanent accounts - ANS ✔balance sheet accounts (A, L, SE)
not closed at end of each period
temporary accounts - ANS ✔income statement accounts (Revenues, Expenses, Dividends
Declared)
are closed at end of each period
general ledger - ANS ✔summarizes effects of journal entries on each account
