ACCTG 231 Exam 1 Question and
answers 100% correct 2025/2026
What are the three steps in the accounting process? - correct answer ✔1. Identifies - Select economic
events
2. Records - Record, classify and summarize
3. Communicates - Analyzes, interpret and explain
What is the formula for Costs of Goods Manufactured (COGM)? - correct answer ✔COGM = Beg. WIP +
Total Manufacturing Costs - End. WIP
What is also part of the accounting process? - correct answer ✔Bookkeeping - in charge of the
recording of economic events
Do Managerial accounting activities focus on reports for internal users? - correct answer ✔Yes
Who uses Accounting Data? - correct answer ✔1. Internal Users
2. External Users
What do Internal users do? - correct answer ✔Managers who plan, organize, and run a business (aka
make decisions for the business)
Examples of Internal Users in specific departments - correct answer ✔1. Finance - is there enough cash
to pay dividends to stockholders?
2. Marketing - What price should we use to maximize the company's net income?
3. Human Resources - Can we afford to give employees raises this year?
4. Management - Which product line is the most profitable?
,- Short answer: Internal accountants, CFO's, managers (inside the company)
What do External users do? - correct answer ✔Individuals and organizations outside a company who
want financial information about the company
- These users make decision for themselves regarding the results of the business.
- Ex:
1. Investors
2. Creditors
3. Suppliers
4. Bankers
5. Tax authorities (Internal Revenue Service)
6. Regulatory Agencies
7. Customers
Example of External Users in specific departments - correct answer ✔1. Investors (owners)
- Use information to decide whether to buy, hold, or sell ownership shares of a company
- Ex Question: Is this company worth investing in?
2. Creditor/Lender
- Use information to evaluate the risks of granting credit or lending money
- Ex Question: Will a company be able to pay its debts as they come due?
- Short answer: Creditors, Stockholders', Investors
What type of external user department would this question fall under: Is the company operating within
prescribed guidelines? - correct answer ✔User = External User
, Department = Regulatory Agency
What type of external user department would this question fall under: Is the company complying with
tax laws? - correct answer ✔User = External
Department = Internal Revenue Service
What type of external user department would this question fall under: Is the company able to pay its
debts? - correct answer ✔User = External
Department = Creditor
What type of external user department would this question fall under: Is the company a good
investment? - correct answer ✔User = External
Department = Investor
What do accountants refer to an economic event as? - correct answer ✔A transaction
What cannot be quantified into dollars and cents and recorded as an accounting transaction? - correct
answer ✔The appointment of a new CPA firm to perform an audit
What can be quantified into dollars and cents and recorded as an accounting transaction? - correct
answer ✔1. Payment of income taxes
2. The sale of store equipment
3. The purchase of a new computer
What is the accounting process correctly sequences as? - correct answer ✔1. Identification
2. Recording
3. Communication
answers 100% correct 2025/2026
What are the three steps in the accounting process? - correct answer ✔1. Identifies - Select economic
events
2. Records - Record, classify and summarize
3. Communicates - Analyzes, interpret and explain
What is the formula for Costs of Goods Manufactured (COGM)? - correct answer ✔COGM = Beg. WIP +
Total Manufacturing Costs - End. WIP
What is also part of the accounting process? - correct answer ✔Bookkeeping - in charge of the
recording of economic events
Do Managerial accounting activities focus on reports for internal users? - correct answer ✔Yes
Who uses Accounting Data? - correct answer ✔1. Internal Users
2. External Users
What do Internal users do? - correct answer ✔Managers who plan, organize, and run a business (aka
make decisions for the business)
Examples of Internal Users in specific departments - correct answer ✔1. Finance - is there enough cash
to pay dividends to stockholders?
2. Marketing - What price should we use to maximize the company's net income?
3. Human Resources - Can we afford to give employees raises this year?
4. Management - Which product line is the most profitable?
,- Short answer: Internal accountants, CFO's, managers (inside the company)
What do External users do? - correct answer ✔Individuals and organizations outside a company who
want financial information about the company
- These users make decision for themselves regarding the results of the business.
- Ex:
1. Investors
2. Creditors
3. Suppliers
4. Bankers
5. Tax authorities (Internal Revenue Service)
6. Regulatory Agencies
7. Customers
Example of External Users in specific departments - correct answer ✔1. Investors (owners)
- Use information to decide whether to buy, hold, or sell ownership shares of a company
- Ex Question: Is this company worth investing in?
2. Creditor/Lender
- Use information to evaluate the risks of granting credit or lending money
- Ex Question: Will a company be able to pay its debts as they come due?
- Short answer: Creditors, Stockholders', Investors
What type of external user department would this question fall under: Is the company operating within
prescribed guidelines? - correct answer ✔User = External User
, Department = Regulatory Agency
What type of external user department would this question fall under: Is the company complying with
tax laws? - correct answer ✔User = External
Department = Internal Revenue Service
What type of external user department would this question fall under: Is the company able to pay its
debts? - correct answer ✔User = External
Department = Creditor
What type of external user department would this question fall under: Is the company a good
investment? - correct answer ✔User = External
Department = Investor
What do accountants refer to an economic event as? - correct answer ✔A transaction
What cannot be quantified into dollars and cents and recorded as an accounting transaction? - correct
answer ✔The appointment of a new CPA firm to perform an audit
What can be quantified into dollars and cents and recorded as an accounting transaction? - correct
answer ✔1. Payment of income taxes
2. The sale of store equipment
3. The purchase of a new computer
What is the accounting process correctly sequences as? - correct answer ✔1. Identification
2. Recording
3. Communication
