Financial Accounting Exam 1
Comprehensive Exam Review 2026/2027
Accounting Equation - correct answer-Assets(things you own)=Liabilities(things
you owe)+Equity(stockholder's claim on assets)
Debt Ratio - correct answer-Total liabilities/total assets
Current Ratio - correct answer-Current Assets/Current Liabilities
Gross-Margin Ratio - correct answer-(Net Sales-Cost of Goods Sold)/Net Sales
International Accounting Standards Board (IASB) - correct answer-Independent
group consisting of members from many countries, creates international financial
reporting standards
Generally Accepted Accounting Principles(GAAP) - correct answer-Made up of
principles and assumptions
, Securities Exchange Commision - correct answer-Created by government to
regulate securities market and protect investors
Principles - correct answer-Put in place so everyone does things the same way
Revenue Recognition Principle - correct answer-Recognize revenue when earned
(service is performed)
Matching Principal - correct answer-Company must record its expenses incurred
to generate the revenue reported
Full Disclosure Principal - correct answer-Company required to report details of
financial statements
Going Concern Assumption - correct answer-Business will continue running
Monetary Unit Assumption - correct answer-Business is measured in monetary
units
Time Period Assumption - correct answer-Life of companies can be divided into
time period
Business Entity Assumption - correct answer-means that a business is accounted
for separately from other business entities, including its owner
Balance Sheet - correct answer-Assets=Liabilities+Equity
Comprehensive Exam Review 2026/2027
Accounting Equation - correct answer-Assets(things you own)=Liabilities(things
you owe)+Equity(stockholder's claim on assets)
Debt Ratio - correct answer-Total liabilities/total assets
Current Ratio - correct answer-Current Assets/Current Liabilities
Gross-Margin Ratio - correct answer-(Net Sales-Cost of Goods Sold)/Net Sales
International Accounting Standards Board (IASB) - correct answer-Independent
group consisting of members from many countries, creates international financial
reporting standards
Generally Accepted Accounting Principles(GAAP) - correct answer-Made up of
principles and assumptions
, Securities Exchange Commision - correct answer-Created by government to
regulate securities market and protect investors
Principles - correct answer-Put in place so everyone does things the same way
Revenue Recognition Principle - correct answer-Recognize revenue when earned
(service is performed)
Matching Principal - correct answer-Company must record its expenses incurred
to generate the revenue reported
Full Disclosure Principal - correct answer-Company required to report details of
financial statements
Going Concern Assumption - correct answer-Business will continue running
Monetary Unit Assumption - correct answer-Business is measured in monetary
units
Time Period Assumption - correct answer-Life of companies can be divided into
time period
Business Entity Assumption - correct answer-means that a business is accounted
for separately from other business entities, including its owner
Balance Sheet - correct answer-Assets=Liabilities+Equity
