CFI Financial Accounting Final Exam
Review Questions and Answers
1. What is financial accounting?
Answer A specialized branch of accounting that keeps track of company's financial
transactions.
2. The Accounting Cycle
Answer ANALYZE (transactions), RECORD (journal entries in the general journal), POST
(amounts to the general ledger)
3. List of Financial Statements
Answer 1. Balance Sheet (BS)
2. Income Statement (IS)
3. Statement of Stockholders Equity (SOS)
4. Statement of Cash flow (SOCF)
4. Financial Accounting Standards Board (FASB)
Answer Sets the accounting standards from SEC
5. Securities & exchange commission (SEC)
Answer Protect Investors. Maintain fair, orderly, and eflcient
markets, Facilitate capital formation.
1/
5
, 6. Retained Earnings Formula
Answer Beginning Revenue + Net Income - Dividends = Ending Revenue
7. Operating Income Formula
Answer Net Sales - Cost of Goods Sold - Operating Expenses = Operating Income
8. Cost of Goods Sold Formula
Answer Beginning Inventory + Inventory Purchases - Ending Inventory = COGS
9. Income before Taxes Formula
Answer Earning before taxes / Revenue – Expenses
10. Journal Entry for Depreciation
Answer Debit Depreciation Expense
Credit
Answer Accumulated Depreciation
11. Journal Entry for Allowance for Bad Debts
Answer Debit
Answer Bad Debt Expense Credit
Answer Allowance for Doubtful Accounts
12. Journal Entry for Accrued Revenue
Answer Debit
2/
5
Review Questions and Answers
1. What is financial accounting?
Answer A specialized branch of accounting that keeps track of company's financial
transactions.
2. The Accounting Cycle
Answer ANALYZE (transactions), RECORD (journal entries in the general journal), POST
(amounts to the general ledger)
3. List of Financial Statements
Answer 1. Balance Sheet (BS)
2. Income Statement (IS)
3. Statement of Stockholders Equity (SOS)
4. Statement of Cash flow (SOCF)
4. Financial Accounting Standards Board (FASB)
Answer Sets the accounting standards from SEC
5. Securities & exchange commission (SEC)
Answer Protect Investors. Maintain fair, orderly, and eflcient
markets, Facilitate capital formation.
1/
5
, 6. Retained Earnings Formula
Answer Beginning Revenue + Net Income - Dividends = Ending Revenue
7. Operating Income Formula
Answer Net Sales - Cost of Goods Sold - Operating Expenses = Operating Income
8. Cost of Goods Sold Formula
Answer Beginning Inventory + Inventory Purchases - Ending Inventory = COGS
9. Income before Taxes Formula
Answer Earning before taxes / Revenue – Expenses
10. Journal Entry for Depreciation
Answer Debit Depreciation Expense
Credit
Answer Accumulated Depreciation
11. Journal Entry for Allowance for Bad Debts
Answer Debit
Answer Bad Debt Expense Credit
Answer Allowance for Doubtful Accounts
12. Journal Entry for Accrued Revenue
Answer Debit
2/
5
