CH. 1 FUNDAMENTALS OF ACCOUNTING
TCU EXAM QUESTIONS AND VERIFIED
DETAILED ANSWERS GRADED A+
QUESTIONS AND ANSWERS
Accounting Entity. ANSWER - the organization for which financial data are to be collected
Accounting Period. ANSWER - the time period covered by the financial statements
Audit. ANSWER - an examination of the financial reports to ensure that they represent what they
claim and conform with generally accepted accounting principles
Balance Sheet (Statement of Financial Position). ANSWER - Reports the amount of assets,
liabilities, and stockholders' equity of an accounting entity at a point in time
Basic Accounting Equation (Balance Sheet Equation). ANSWER - Assets = Liabilities +
Stockholders' Equity
Generally Accepted Accounting Principles (GAAP). ANSWER - the measurement and disclosure
rules used to develop the information in the financial statements
Income Statement (Statement of Income, Statement of Earnings, Statement of Operations,
Statement of Comprehensive Income). ANSWER - reports the revenues less the expenses of the
accounting period
Notes (Footnotes). ANSWER - provide supplemental information about the financial condition of a
company, without which the financial statements cannot be fully understood
Statement of Cash Flows (Cash Flow Statements). ANSWER - reports the inflows and outflows of
cash during the accounting period in the categories of operating, investing, and financing
Statement of Stockholders' Equity. ANSWER - reports the way that net income and the
distribution of dividends affected the financial position of the company during the accounting period
TCU EXAM QUESTIONS AND VERIFIED
DETAILED ANSWERS GRADED A+
QUESTIONS AND ANSWERS
Accounting Entity. ANSWER - the organization for which financial data are to be collected
Accounting Period. ANSWER - the time period covered by the financial statements
Audit. ANSWER - an examination of the financial reports to ensure that they represent what they
claim and conform with generally accepted accounting principles
Balance Sheet (Statement of Financial Position). ANSWER - Reports the amount of assets,
liabilities, and stockholders' equity of an accounting entity at a point in time
Basic Accounting Equation (Balance Sheet Equation). ANSWER - Assets = Liabilities +
Stockholders' Equity
Generally Accepted Accounting Principles (GAAP). ANSWER - the measurement and disclosure
rules used to develop the information in the financial statements
Income Statement (Statement of Income, Statement of Earnings, Statement of Operations,
Statement of Comprehensive Income). ANSWER - reports the revenues less the expenses of the
accounting period
Notes (Footnotes). ANSWER - provide supplemental information about the financial condition of a
company, without which the financial statements cannot be fully understood
Statement of Cash Flows (Cash Flow Statements). ANSWER - reports the inflows and outflows of
cash during the accounting period in the categories of operating, investing, and financing
Statement of Stockholders' Equity. ANSWER - reports the way that net income and the
distribution of dividends affected the financial position of the company during the accounting period
