Accounting 2101 GSU - Exam 1 Test
Questions And 100% Correct Answers
2025-2026 Updated.
• Identify the advantages of the corporate form of business organization - Answer Easier to
transfer ownership
Easier to raise funds
No personal liability
Identify the disadvantages of the corporate form of business organization - Answer double
taxed
file annual paperwork
• Identify internal users of financial information. - Answer Marketing- price for iPod to
maximize net income? Management- which product line most profitable; should eliminate any
products? Finance- have enough money to pay dividends? Human Resources- can we give
raises?
Identify external users of financial information. - Answer Investors- is company earnings
satisfactory income? Creditors- Will company be able to pay its debts? Investors- how does
company a compare in size and profitability to company B.
What is the accounting equation? - Answer Assets = Liabilities + Stockholders' Equity
What order does the balance sheet go in? - Answer assets first, followed by liabilities and
stockholders' equity.
What are the three activities within a business? - Answer Operating, Investing, and Financing
Name the two primary sources of outside funds in Financing activities and what they do. -
Answer 1. Borrowing money
•Liabilities - amounts owed
•Creditors- party to whom amounts are owed
•Notes Payable, Bonds Payable- different types of liabilities
, Name some Investing activities - Answer Purchase of resources a company needs to operate.
• Computers, delivery trucks, furniture, buildings, etc. (property, plant, and equipment)
•Resources owned by a business are called assets.
•Investments are another example of an investing activity
Name some operating activities - Answer Revenues - Amounts earned from the sale of
products (sales revenue, service revenue, and interest revenue).
• Inventory - Goods available for sale to customers.
• Accounts receivable - Right to receive money from a customer as the result of a sale.
Revenues - Answer - Amounts earned from the sale of products (sales revenue, service
revenue, and interest revenue).
Inventory - Answer Goods available for sale to customers.
Accounts Receivable - Answer Right to receive money from a customer as the result of a sale.
Expenses - Answer cost of assets consumed or services used. (cost of goods sold, selling,
marketing, administrative, interest, and income taxes expense).
Liabilities from expenses - Answer include accounts payable, interest payable, wages payable,
sales taxes payable, and income taxes payable.
Net Income - Answer when revenue exceeds expenses
Net Loss - Answer when expenses exceed revenues
What order does the paperwork go in? - Answer Income Statement → Retained Earnings
Statement → Balance Sheet → Statement of Cash Flows
Identify the purpose of the auditor's report. - Answer Auditor's opinion as to the fairness of
the presentation of the financial position and results of operations and their conformance with
generally accepted accounting principles.
Questions And 100% Correct Answers
2025-2026 Updated.
• Identify the advantages of the corporate form of business organization - Answer Easier to
transfer ownership
Easier to raise funds
No personal liability
Identify the disadvantages of the corporate form of business organization - Answer double
taxed
file annual paperwork
• Identify internal users of financial information. - Answer Marketing- price for iPod to
maximize net income? Management- which product line most profitable; should eliminate any
products? Finance- have enough money to pay dividends? Human Resources- can we give
raises?
Identify external users of financial information. - Answer Investors- is company earnings
satisfactory income? Creditors- Will company be able to pay its debts? Investors- how does
company a compare in size and profitability to company B.
What is the accounting equation? - Answer Assets = Liabilities + Stockholders' Equity
What order does the balance sheet go in? - Answer assets first, followed by liabilities and
stockholders' equity.
What are the three activities within a business? - Answer Operating, Investing, and Financing
Name the two primary sources of outside funds in Financing activities and what they do. -
Answer 1. Borrowing money
•Liabilities - amounts owed
•Creditors- party to whom amounts are owed
•Notes Payable, Bonds Payable- different types of liabilities
, Name some Investing activities - Answer Purchase of resources a company needs to operate.
• Computers, delivery trucks, furniture, buildings, etc. (property, plant, and equipment)
•Resources owned by a business are called assets.
•Investments are another example of an investing activity
Name some operating activities - Answer Revenues - Amounts earned from the sale of
products (sales revenue, service revenue, and interest revenue).
• Inventory - Goods available for sale to customers.
• Accounts receivable - Right to receive money from a customer as the result of a sale.
Revenues - Answer - Amounts earned from the sale of products (sales revenue, service
revenue, and interest revenue).
Inventory - Answer Goods available for sale to customers.
Accounts Receivable - Answer Right to receive money from a customer as the result of a sale.
Expenses - Answer cost of assets consumed or services used. (cost of goods sold, selling,
marketing, administrative, interest, and income taxes expense).
Liabilities from expenses - Answer include accounts payable, interest payable, wages payable,
sales taxes payable, and income taxes payable.
Net Income - Answer when revenue exceeds expenses
Net Loss - Answer when expenses exceed revenues
What order does the paperwork go in? - Answer Income Statement → Retained Earnings
Statement → Balance Sheet → Statement of Cash Flows
Identify the purpose of the auditor's report. - Answer Auditor's opinion as to the fairness of
the presentation of the financial position and results of operations and their conformance with
generally accepted accounting principles.
