Accounting 2026/2027
Q&A and Rationales |
Study Guide & Practice
Q&A Review and
Rationales
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Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
, Creditors From a legal perspective, _________ have a legal priority over stockholders. Thus if
a company goes out of business, liabilities must be paid before any amounts
are paid to stockholders.
Stockholders Equity represents the owners claim on the business. The claims arise for two reasons
1. the owners have a claim on amounts they contributed directly to the
company in exchange for common stock
2. the owners have a claim on amounts the company has earned through
profitable business operations (retained earnings)
revenues earned by selling goods or services to customers
Expenses all costs of doing business that are necessary to earn revenues.
By generating _______ ________ , a company increases it's net income
stockholders equity
A company's profits are accumulated in retained dividends
earnings until a decision is made to distribute them to
stockholders is what is called a ___________.
________ are NOT an expense incurred to generate dividends
earnings, rather __________ are an optional distribution of
earnings to stockholders, approved by the companys
board of directors.
-Reported in retained earnings
4 main accounting reports 1. Income Statement
2. Statement of retained earnings
3. Balance Sheet
4. Statement of cash flows
Calendar year a 12 month period ending on december 31st
fiscal year a 12 month period ending on a day other than decmber 31
Income statement the body of an __________ __________ has three major parts...
1. revenues
2. expenses
3. net income
revenues - expenses = net income
tax when listing expenses on a income statement, list highest to lowest, with the
exception of _____ expense at the very bottom of expenses ALWAYS
Q&A and Rationales |
Study Guide & Practice
Q&A Review and
Rationales
|Graded A+ | Guaranteed
success|
Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
, Creditors From a legal perspective, _________ have a legal priority over stockholders. Thus if
a company goes out of business, liabilities must be paid before any amounts
are paid to stockholders.
Stockholders Equity represents the owners claim on the business. The claims arise for two reasons
1. the owners have a claim on amounts they contributed directly to the
company in exchange for common stock
2. the owners have a claim on amounts the company has earned through
profitable business operations (retained earnings)
revenues earned by selling goods or services to customers
Expenses all costs of doing business that are necessary to earn revenues.
By generating _______ ________ , a company increases it's net income
stockholders equity
A company's profits are accumulated in retained dividends
earnings until a decision is made to distribute them to
stockholders is what is called a ___________.
________ are NOT an expense incurred to generate dividends
earnings, rather __________ are an optional distribution of
earnings to stockholders, approved by the companys
board of directors.
-Reported in retained earnings
4 main accounting reports 1. Income Statement
2. Statement of retained earnings
3. Balance Sheet
4. Statement of cash flows
Calendar year a 12 month period ending on december 31st
fiscal year a 12 month period ending on a day other than decmber 31
Income statement the body of an __________ __________ has three major parts...
1. revenues
2. expenses
3. net income
revenues - expenses = net income
tax when listing expenses on a income statement, list highest to lowest, with the
exception of _____ expense at the very bottom of expenses ALWAYS
