ACC 212 Final Exam Questions with Correct Answers Latest Update 2025/2026
Assets - Answers Resources a company owns that are expected to provide future economic
benefits.
Liabilities - Answers Obligations a company owes to creditors; claims by outsiders.
Stockholders' equity - Answers Owners' claim on the company's assets after liabilities are paid.
Accounting equation - Answers The fundamental relationship that assets are financed by
liabilities and stockholders' equity.
Current assets - Answers Assets expected to be used or converted to cash within one year.
Long-term assets - Answers Assets expected to provide benefits for more than one year.
Current liabilities - Answers Obligations due within one year.
Long-term liabilities - Answers Obligations due in more than one year.
Revenue - Answers Increase in equity from providing goods or services to customers.
Expense - Answers Costs of doing business that decrease equity in the current period.
Dividends - Answers Distributions of earnings to stockholders; decrease retained earnings but
are not expenses.
Retained earnings - Answers Accumulated net income not yet distributed as dividends.
Common stock - Answers Basic ownership shares issued to investors.
Preferred stock - Answers Stock with priority over common stock for dividends and liquidation,
usually without voting rights.
Treasury stock - Answers Company's own stock that has been repurchased; a contra-equity
account.
Financial statements - Answers Set of reports summarizing a company's financial performance
and position.
Income statement - Answers Reports revenues and expenses for a period to show net income
or loss.
Statement of stockholders' equity - Answers Shows changes in equity accounts, including
retained earnings, over a period.
Balance sheet - Answers Reports assets, liabilities, and stockholders' equity at a specific point
in time.
, Statement of cash flows - Answers Shows cash inflows and outflows classified as operating,
investing, or financing activities.
Operating activities - Answers Day-to-day activities that relate to revenue and expense
transactions.
Investing activities - Answers Activities involving purchases and sales of long-term assets and
investments.
Financing activities - Answers Activities involving borrowing from creditors or transactions with
owners (stock and dividends).
Accrual basis accounting - Answers Recognizes revenue when earned and expenses when
incurred, regardless of cash timing.
Cash basis accounting - Answers Recognizes revenue when cash is received and expenses
when cash is paid.
Revenue recognition principle - Answers Revenue is recorded when it is earned, not necessarily
when cash is received.
Matching principle - Answers Expenses are recorded in the same period as the revenues they
help generate.
Prepaid expense - Answers Payment for a future benefit recorded initially as an asset and
expensed over time.
Deferred revenue - Answers Cash received before services are provided; recorded as a liability
until earned.
Accrued revenue - Answers Revenue that has been earned but not yet billed or collected in cash.
Accrued expense - Answers Expense that has been incurred but not yet paid in cash.
Adjusting entries - Answers Entries at the end of a period to update account balances for
accruals and deferrals.
Closing entries - Answers Entries that reset revenue, expense, and dividend accounts to zero
and update retained earnings.
Temporary accounts - Answers Accounts that accumulate balances for a period then are closed
(revenues, expenses, dividends).
Permanent accounts - Answers Balance sheet accounts whose balances carry forward to the
next period.
Chart of accounts - Answers List of all account names and numbers used by a company.
Assets - Answers Resources a company owns that are expected to provide future economic
benefits.
Liabilities - Answers Obligations a company owes to creditors; claims by outsiders.
Stockholders' equity - Answers Owners' claim on the company's assets after liabilities are paid.
Accounting equation - Answers The fundamental relationship that assets are financed by
liabilities and stockholders' equity.
Current assets - Answers Assets expected to be used or converted to cash within one year.
Long-term assets - Answers Assets expected to provide benefits for more than one year.
Current liabilities - Answers Obligations due within one year.
Long-term liabilities - Answers Obligations due in more than one year.
Revenue - Answers Increase in equity from providing goods or services to customers.
Expense - Answers Costs of doing business that decrease equity in the current period.
Dividends - Answers Distributions of earnings to stockholders; decrease retained earnings but
are not expenses.
Retained earnings - Answers Accumulated net income not yet distributed as dividends.
Common stock - Answers Basic ownership shares issued to investors.
Preferred stock - Answers Stock with priority over common stock for dividends and liquidation,
usually without voting rights.
Treasury stock - Answers Company's own stock that has been repurchased; a contra-equity
account.
Financial statements - Answers Set of reports summarizing a company's financial performance
and position.
Income statement - Answers Reports revenues and expenses for a period to show net income
or loss.
Statement of stockholders' equity - Answers Shows changes in equity accounts, including
retained earnings, over a period.
Balance sheet - Answers Reports assets, liabilities, and stockholders' equity at a specific point
in time.
, Statement of cash flows - Answers Shows cash inflows and outflows classified as operating,
investing, or financing activities.
Operating activities - Answers Day-to-day activities that relate to revenue and expense
transactions.
Investing activities - Answers Activities involving purchases and sales of long-term assets and
investments.
Financing activities - Answers Activities involving borrowing from creditors or transactions with
owners (stock and dividends).
Accrual basis accounting - Answers Recognizes revenue when earned and expenses when
incurred, regardless of cash timing.
Cash basis accounting - Answers Recognizes revenue when cash is received and expenses
when cash is paid.
Revenue recognition principle - Answers Revenue is recorded when it is earned, not necessarily
when cash is received.
Matching principle - Answers Expenses are recorded in the same period as the revenues they
help generate.
Prepaid expense - Answers Payment for a future benefit recorded initially as an asset and
expensed over time.
Deferred revenue - Answers Cash received before services are provided; recorded as a liability
until earned.
Accrued revenue - Answers Revenue that has been earned but not yet billed or collected in cash.
Accrued expense - Answers Expense that has been incurred but not yet paid in cash.
Adjusting entries - Answers Entries at the end of a period to update account balances for
accruals and deferrals.
Closing entries - Answers Entries that reset revenue, expense, and dividend accounts to zero
and update retained earnings.
Temporary accounts - Answers Accounts that accumulate balances for a period then are closed
(revenues, expenses, dividends).
Permanent accounts - Answers Balance sheet accounts whose balances carry forward to the
next period.
Chart of accounts - Answers List of all account names and numbers used by a company.
