Financial Accounting Exam #1 ACTUAL UPDATED QUESTIONS AND CORRECT
ANSWERS
Assets Resources owned by or under the economic control of a firm that will provide a
FUTURE benefit
1) Resources that can provide future value
2) The value of assets can be measured with a strong level of precision
, Cash Money given to help buy long term assets
Checking/savings/treasury bills
Accounts Receivable When a customer buys on credit and owes the business money
Inventory The actual product that is being sold
Prepaid Assets Goods you pay for before getting the benefit
Ex: insurance and rent expense
Marketable Securities Bonds, stocks of other firms, and other tradable investments that the firm owns
Long Term Assets Tangible Physical assets
Ex: Stores, factories, etc.
Long Term Assets Intangible A product that is not physical
Ex: A warrant to be the exclusive dealer of a product
Long Term Receivable The amount owed to the firm from customers/borrowers that will be repaid in a
period beyond the current year
Ex: Loans
Accumulated Depreciation and Amortization When the value of a tangible/intangible asset goes down; subtractions from the
initial value of a long term resource
Deferred Tax Assets When prepaid income taxes are paid for the future reduction in tax expenses and
future benefits
Goodwill The future benefit the companies receive through acquiring another company
Identifiable Asset Value Reevaluating a companies assets from book value when you buy the company
Operational Synergies Combined costs through acquisition; this gets rid of duplicated costs
Premium The extra amount of money paid in an acquisition as goodwill
Current Assets Assets that provide a benefit within a year
Ex: Expecting to sell inventory within a year
Long Term Assets Assets that provide benefits over multiple or future periods; they are illiquid
because you need to wait to sell them if you want to receive their full value
Ex: You are the exclusive dealer of a product for 5 years
ANSWERS
Assets Resources owned by or under the economic control of a firm that will provide a
FUTURE benefit
1) Resources that can provide future value
2) The value of assets can be measured with a strong level of precision
, Cash Money given to help buy long term assets
Checking/savings/treasury bills
Accounts Receivable When a customer buys on credit and owes the business money
Inventory The actual product that is being sold
Prepaid Assets Goods you pay for before getting the benefit
Ex: insurance and rent expense
Marketable Securities Bonds, stocks of other firms, and other tradable investments that the firm owns
Long Term Assets Tangible Physical assets
Ex: Stores, factories, etc.
Long Term Assets Intangible A product that is not physical
Ex: A warrant to be the exclusive dealer of a product
Long Term Receivable The amount owed to the firm from customers/borrowers that will be repaid in a
period beyond the current year
Ex: Loans
Accumulated Depreciation and Amortization When the value of a tangible/intangible asset goes down; subtractions from the
initial value of a long term resource
Deferred Tax Assets When prepaid income taxes are paid for the future reduction in tax expenses and
future benefits
Goodwill The future benefit the companies receive through acquiring another company
Identifiable Asset Value Reevaluating a companies assets from book value when you buy the company
Operational Synergies Combined costs through acquisition; this gets rid of duplicated costs
Premium The extra amount of money paid in an acquisition as goodwill
Current Assets Assets that provide a benefit within a year
Ex: Expecting to sell inventory within a year
Long Term Assets Assets that provide benefits over multiple or future periods; they are illiquid
because you need to wait to sell them if you want to receive their full value
Ex: You are the exclusive dealer of a product for 5 years
