acct 201 final Exam 1 Questions and Correct
Answers
What is the primary purpose of accounting?
Provide financial information (B)
Which group uses accounting information to make investment decisions?
Investors (B)
A reporting entity is:
A business unit with financial statements (B)
Which of the following best describes owner's equity?
Owner's claim on assets (C)
The accounting equation is:
Assets = Liabilities + Equity (B)
Which is an asset?
Cash (B)
Paying cash for rent:
Decreases assets and equity (B)
Borrowing money affects:
Liabilities and assets (B)
Net income is calculated as:
Revenue - Expenses (C)
, Which statement shows financial position at a point in time?
Balance sheet (B)
Which financial statement reports revenues and expenses over a period of time?
Income statement (B)
Accounts receivable is:
An asset (B)
Accounts payable is:
Liability (C)
Accrual accounting recognizes revenue when:
Earned (B)
Accrued expense means:
Incurred but unpaid (C)
What is the purpose of adjusting entries?
Ensure revenues and expenses are recognized properly (C)
Supplies used are recorded as:
Expense (B)
Prepaid rent is initially recorded as:
Asset (C)
Unearned revenue is:
Liability (C)
Answers
What is the primary purpose of accounting?
Provide financial information (B)
Which group uses accounting information to make investment decisions?
Investors (B)
A reporting entity is:
A business unit with financial statements (B)
Which of the following best describes owner's equity?
Owner's claim on assets (C)
The accounting equation is:
Assets = Liabilities + Equity (B)
Which is an asset?
Cash (B)
Paying cash for rent:
Decreases assets and equity (B)
Borrowing money affects:
Liabilities and assets (B)
Net income is calculated as:
Revenue - Expenses (C)
, Which statement shows financial position at a point in time?
Balance sheet (B)
Which financial statement reports revenues and expenses over a period of time?
Income statement (B)
Accounts receivable is:
An asset (B)
Accounts payable is:
Liability (C)
Accrual accounting recognizes revenue when:
Earned (B)
Accrued expense means:
Incurred but unpaid (C)
What is the purpose of adjusting entries?
Ensure revenues and expenses are recognized properly (C)
Supplies used are recorded as:
Expense (B)
Prepaid rent is initially recorded as:
Asset (C)
Unearned revenue is:
Liability (C)
