FAC 1502 FINANCIAL ACCOUNTING ELEMENTARY CALCULATIONS EXAMINATION ACTUAL
TEST PAPER QUESTIONS CORRECT ANSWERS GRADED A PLUS
Question:
● Liabilities
Answer:
Amount that company owes
Question:
● Equity
Answer:
Amount invested in company by owners; owners claim no assets
Question:
● Accounting equation
Answer:
Assets = liabilities + equity
Question:
● Truism in business
Answer:
Company never receives greater than it gives & never gives greater than it receives
Question:
● 4 Rules of debits & credits
,Answer:
1. Debit amount received; credit amount given up 2. Debuts on left; credits on the right 3. In each
transactions; list debits first (good) & credits last (bad) 4. Total debits = total credits
Question:
● Making an ethical decision
Answer:
1. Identify ethical concerns- use personal ethics to recognize concern 2. Analyze options- consider
all good & bad consequences 3. Make ethical decision- choose best option given circumstances
Question:
● Fraud
Answer:
Intentional manipulation- focus on prevention. Once fraud is committed, loses are rarely retrieved.
Question:
● Fraud Triangle
Answer:
Opportunity (low risk of being caught), Financial Pressure (incentive), Rationalization (making
situation justifiable)
Question:
● GAAP (generally accepted accounting principles)
Answer:
Financial accounting is governed by concepts & rules. 1. Relevant info affects decision of user 2.
Reliable info trusted by users 3. Comparable info aids in contrasting organizations
Question:
, ● SEC- Securities and Exchange Commission
Answer:
Federal agency congress has charged to set reporting rules for org that sell ownership shares to
public
Question:
● FASB (Financial Accounting Standards Board)
Answer:
Independent group of full-time members responsible for setting accounting rules
Question:
● IASB (international accounting standards board)
Answer:
Group that identifies preferred accounting practices & encourages global acceptance; issues IFRS
Question:
● Measurement/cost principle
Answer:
Accounting info based on actual cost. if cash is given for a service, cost is measured by cash paid if
other is exchanged (car traded for truck), cost is measured as cash value of what is given up or
received This ensure reliability, verifiability
Question:
● Revenue Recognition Principle
Answer:
Recognition = recording happens when goods or services are provided to customers is recorded at
the amount received
TEST PAPER QUESTIONS CORRECT ANSWERS GRADED A PLUS
Question:
● Liabilities
Answer:
Amount that company owes
Question:
● Equity
Answer:
Amount invested in company by owners; owners claim no assets
Question:
● Accounting equation
Answer:
Assets = liabilities + equity
Question:
● Truism in business
Answer:
Company never receives greater than it gives & never gives greater than it receives
Question:
● 4 Rules of debits & credits
,Answer:
1. Debit amount received; credit amount given up 2. Debuts on left; credits on the right 3. In each
transactions; list debits first (good) & credits last (bad) 4. Total debits = total credits
Question:
● Making an ethical decision
Answer:
1. Identify ethical concerns- use personal ethics to recognize concern 2. Analyze options- consider
all good & bad consequences 3. Make ethical decision- choose best option given circumstances
Question:
● Fraud
Answer:
Intentional manipulation- focus on prevention. Once fraud is committed, loses are rarely retrieved.
Question:
● Fraud Triangle
Answer:
Opportunity (low risk of being caught), Financial Pressure (incentive), Rationalization (making
situation justifiable)
Question:
● GAAP (generally accepted accounting principles)
Answer:
Financial accounting is governed by concepts & rules. 1. Relevant info affects decision of user 2.
Reliable info trusted by users 3. Comparable info aids in contrasting organizations
Question:
, ● SEC- Securities and Exchange Commission
Answer:
Federal agency congress has charged to set reporting rules for org that sell ownership shares to
public
Question:
● FASB (Financial Accounting Standards Board)
Answer:
Independent group of full-time members responsible for setting accounting rules
Question:
● IASB (international accounting standards board)
Answer:
Group that identifies preferred accounting practices & encourages global acceptance; issues IFRS
Question:
● Measurement/cost principle
Answer:
Accounting info based on actual cost. if cash is given for a service, cost is measured by cash paid if
other is exchanged (car traded for truck), cost is measured as cash value of what is given up or
received This ensure reliability, verifiability
Question:
● Revenue Recognition Principle
Answer:
Recognition = recording happens when goods or services are provided to customers is recorded at
the amount received
