Principles Of Accounting Exam 1 Study Guide: Questions And Correct Answers 100% Verified Latest Updated 2026/2027

PRINCIPLES OF ACCOUNTING EXAM
1 STUDY GUIDE: QUESTIONS AND
CORRECT ANSWERS 100% VERIFIED
LATEST UPDATED 2026/2027
WhatGisGaccountingG?G-GCORRECTGANSWER-
theGinformationGsystemGthatGidentifies,Grecords,GandGcommunicatesGtheGeconomicGeventsGofGanGorganiz
ationGtoGinterestedGusers



WhatGareGtheGthreeGbasicGactivitiesGofGAccountingG?G-GCORRECTGANSWER-
Identifying,Grecording,GandGcommunicating



InternalGUsersG-GCORRECTGANSWER-
ManagersGwhoGplan,Gorganize,GandGrunGtheGbusiness.GEx:GMarketingGManagers,GFinanceGDirectors



ExternalGUsersG-GCORRECTGANSWER-
Individuals,GandGorganizationsGoutsideGaGcompanyGwhoGwantGfinancialGinformationGaboutGtheGcompany.



InvestorsG(Owners)G-GCORRECTGANSWER-
DecideGwhetherGtoGbuy,Ghold,GorGsellGownershipGsharesGofGaGcompany.



CreditorsG(BankersGandGSuppliers)G-GCORRECTGANSWER-
EvaluateGtheGrisksGofGgrantingGcreditGorGlendingGmoney.



WhyGisGEthicsGaGfundamentalGbuildingGblockGofGbusinessG?G-GCORRECTGANSWER-
HelpsGtoGkeepGdependable,GandGaccurateGfinancialGreporting.



WhatGisGSOXG?G-GCORRECTGANSWER-Sarbanes-
OxleyGAct:GLawGpassedGbyGCongressGintendedGtoGreduceGunethicalGcorporateGbehavior.

, WhatGareGGenerallyGAcceptedGAccountingGPrinciplesG?G(GAAP)G-GCORRECTGANSWER-
CommonGstandardsGthatGindicateGhowGtoGreportGeconomicGevents.



FinancialGAccountingGStandardsGBoardG(FASB):G-GCORRECTGANSWER-
AGprivateGorganizationGthatGestablishesGGAAPGinGtheGU.S.



SecurityGandGExchangeGCommissionG(SEC):G-GCORRECTGANSWER-
AGgovernmentalGagencyGthatGoverseesGU.S.GfinancialGmarketsGandGaccountingGstandard-settingGbodies.



InternationalGAccountingGStandardsGBoardG(IASB):G-GCORRECTGANSWER-AnGaccountingGstandard-
settingGbodyGthatGissuesGstandardsGadoptedGbyGmanyGcountriesGoutsideGtheGU.S.



HistoricalGCostGPrinciple:G-GCORRECTGANSWER-
DictatesGthatGcompaniesGrecordGassetsGatGtheirGcost.GThisGisGtrueGatGtheGtimeGtheGassetGisGpurchased,GasG
wellGasGoverGtheGtimeGtheGassetGisGheld.



FairGValueGPrinciple:G-GCORRECTGANSWER-
StatesGthatGassets,GandGliabilitiesGshouldGbeGreportedGatGfairGvalue.G(GTheGpriceGreceivedGtoGsellGanGassetG
orGsettleGaGliabilityG)



MonetaryGUnitGAssumption:G-GCORRECTGANSWER-
requiresGthatGcompaniesGincludeGinGtheGaccountingGrecordsGONLYGtransactionGdataGthatGcanGbeGexpresse
dGinGMoneyGTerms.



-EnablesGaccountingGtoGquantifyG(Measure)GeconomicGevents.



-TheGmonetaryGunitGassumptionGisGvitalGtoGapplyingGtheGhistoricalGcostGprinciple.



EconomicGEntityGAssumption:G-GCORRECTGANSWER-
RequiresGthatGtheGactivitiesGofGtheGentityGbeGkeptGseparate,GandGdistinctGfromGtheGactivitiesGofGitsGownerG
andGallGotherGeconomicGentities.G



-AnGeconomicGentityGcanGbeGanyGorganizationGorGunitGinGsociety.