FINANCIAL ACCOUNTING FUNDAMENTALS
COMPREHENSIVE EXAM 2026
◉ What is the role of Auditing in accounting? Answer: To ensure the
fairness and reliability of financial reports
◉ What is Bookkeeping? Answer: The mechanical task of collecting
financial data and preparing statements
◉ What does Government Accounting focus on? Answer: Identifying
sources and uses of resources according to laws
◉ What is Financial Accounting? Answer: Recording transactions
and preparing reports primarily for external use
◉ What is the purpose of Management Accounting? Answer: To
provide information for internal decision-making
◉ What does Tax Accounting involve? Answer: Preparing tax returns
and considering tax consequences of transactions
◉ Where did accounting first develop? Answer: Ancient
Mesopotamia
,◉ Who is known as the Father of Accounting? Answer: Luca Pacioli
◉ What are the three main business activities? Answer: Financing,
Investing, and Operating activities
◉ What do Financing activities include? Answer: Methods to obtain
financial resources and manage them
◉ What is the main focus of Investing activities? Answer: Acquiring
resources for future profit generation
◉ What is the purpose of Operating activities? Answer: To make
goods and services available to consumers
◉ What are investing activities in accounting? Answer: Investing
activities involve the selection and management of resources used to
develop, produce, and sell goods and services.
◉ What do operating activities encompass? Answer: Operating
activities involve the use of resources to design, produce, distribute,
and market goods and services.
,◉ What is the recognition issue in accounting? Answer: The
recognition issue involves deciding when a transaction occurred.
◉ What is the valuation issue in accounting? Answer: The valuation
issue involves determining what value to place on a transaction.
◉ What is the classification issue in accounting? Answer: The
classification issue involves deciding how components of a
transaction should be classified.
◉ What is the purpose of financial statements? Answer: Financial
statements classify and summarize data to evaluate the liquidity,
profitability, and solvency of a business.
◉ What are Generally Accepted Accounting Principles (GAAP)?
Answer: GAAP encompasses the conventions, rules, and procedures
necessary to define accepted accounting principles at a particular
time.
◉ What criteria determine the acceptance of an accounting
principle? Answer: The acceptance of an accounting principle
depends on its relevance, objectivity, and feasibility.
, ◉ Define relevance in accounting. Answer: Relevance is the ability of
information to provide meaningful and useful results for decision-
making.
◉ What does objectivity mean in accounting? Answer: Objectivity
refers to information being free from personal bias and based on
solid evidence.
◉ What is feasibility in accounting principles? Answer: Feasibility is
the ability to implement a principle without undue complexity or
cost.
◉ What is the entity concept in accounting? Answer: The entity
concept states that each entity should be evaluated separately,
separating owners from the business.
◉ What does the periodicity concept refer to? Answer: The
periodicity concept divides the life of an entity into equal time
periods for timely data analysis.
◉ Explain the stable monetary unit concept. Answer: The stable
monetary unit concept treats currency amounts as having the same
purchasing power over time, ignoring inflation effects.
COMPREHENSIVE EXAM 2026
◉ What is the role of Auditing in accounting? Answer: To ensure the
fairness and reliability of financial reports
◉ What is Bookkeeping? Answer: The mechanical task of collecting
financial data and preparing statements
◉ What does Government Accounting focus on? Answer: Identifying
sources and uses of resources according to laws
◉ What is Financial Accounting? Answer: Recording transactions
and preparing reports primarily for external use
◉ What is the purpose of Management Accounting? Answer: To
provide information for internal decision-making
◉ What does Tax Accounting involve? Answer: Preparing tax returns
and considering tax consequences of transactions
◉ Where did accounting first develop? Answer: Ancient
Mesopotamia
,◉ Who is known as the Father of Accounting? Answer: Luca Pacioli
◉ What are the three main business activities? Answer: Financing,
Investing, and Operating activities
◉ What do Financing activities include? Answer: Methods to obtain
financial resources and manage them
◉ What is the main focus of Investing activities? Answer: Acquiring
resources for future profit generation
◉ What is the purpose of Operating activities? Answer: To make
goods and services available to consumers
◉ What are investing activities in accounting? Answer: Investing
activities involve the selection and management of resources used to
develop, produce, and sell goods and services.
◉ What do operating activities encompass? Answer: Operating
activities involve the use of resources to design, produce, distribute,
and market goods and services.
,◉ What is the recognition issue in accounting? Answer: The
recognition issue involves deciding when a transaction occurred.
◉ What is the valuation issue in accounting? Answer: The valuation
issue involves determining what value to place on a transaction.
◉ What is the classification issue in accounting? Answer: The
classification issue involves deciding how components of a
transaction should be classified.
◉ What is the purpose of financial statements? Answer: Financial
statements classify and summarize data to evaluate the liquidity,
profitability, and solvency of a business.
◉ What are Generally Accepted Accounting Principles (GAAP)?
Answer: GAAP encompasses the conventions, rules, and procedures
necessary to define accepted accounting principles at a particular
time.
◉ What criteria determine the acceptance of an accounting
principle? Answer: The acceptance of an accounting principle
depends on its relevance, objectivity, and feasibility.
, ◉ Define relevance in accounting. Answer: Relevance is the ability of
information to provide meaningful and useful results for decision-
making.
◉ What does objectivity mean in accounting? Answer: Objectivity
refers to information being free from personal bias and based on
solid evidence.
◉ What is feasibility in accounting principles? Answer: Feasibility is
the ability to implement a principle without undue complexity or
cost.
◉ What is the entity concept in accounting? Answer: The entity
concept states that each entity should be evaluated separately,
separating owners from the business.
◉ What does the periodicity concept refer to? Answer: The
periodicity concept divides the life of an entity into equal time
periods for timely data analysis.
◉ Explain the stable monetary unit concept. Answer: The stable
monetary unit concept treats currency amounts as having the same
purchasing power over time, ignoring inflation effects.
