MGT 6201 ACCOUNTING WEEK 1 |
COMPREHENSIVE STUDY GUIDE, PRACTICE
QUESTIONS, CORRECT ANSWERS AND
EXAM PREP
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
, What is the role of the SEC in financial accounting? The Securities and Exchange Commission oversees all publicly traded companies.
What is an external audit? An audit conducted by an independent party to provide reasonable assurance that
financial statements are free of material misstatements.
What are the required financial statements? Balance Sheet, Income Statement, Statement of Shareholders' Equity, Statement of Cash
Flows, Statement of Comprehensive Income.
What does a balance sheet describe? The sources and uses of funds of a firm at a point in time.
What are assets? Economic resources owned or controlled by a company that have future economic
benefits.
What is the accounting equation? Assets = Liabilities + Owners' Equity.
What is the difference between current and long-term assets? Current assets can be converted to cash within a year, while long-term assets cannot.
What are liabilities? Future obligations to pay cash, transfer assets, or provide services to another party.
What is owners' equity? The ownership interest in the net assets of an entity.
How is retained earnings calculated? Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings.
What does the income statement show? How much a company earned over a period of time, helping evaluate past performance
and predict future performance.
What are revenues? Increases in a company's resources from the sale of goods or services.
What are expenses? Costs incurred in the normal course of business to generate revenues.
What is net income? An overall measure of the performance of a company, indicating profit or loss.
What is the difference between gains/losses and Gains/losses are money made or lost outside of normal operations, while
revenues/expenses? revenues/expenses are related to regular business activities.
COMPREHENSIVE STUDY GUIDE, PRACTICE
QUESTIONS, CORRECT ANSWERS AND
EXAM PREP
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
, What is the role of the SEC in financial accounting? The Securities and Exchange Commission oversees all publicly traded companies.
What is an external audit? An audit conducted by an independent party to provide reasonable assurance that
financial statements are free of material misstatements.
What are the required financial statements? Balance Sheet, Income Statement, Statement of Shareholders' Equity, Statement of Cash
Flows, Statement of Comprehensive Income.
What does a balance sheet describe? The sources and uses of funds of a firm at a point in time.
What are assets? Economic resources owned or controlled by a company that have future economic
benefits.
What is the accounting equation? Assets = Liabilities + Owners' Equity.
What is the difference between current and long-term assets? Current assets can be converted to cash within a year, while long-term assets cannot.
What are liabilities? Future obligations to pay cash, transfer assets, or provide services to another party.
What is owners' equity? The ownership interest in the net assets of an entity.
How is retained earnings calculated? Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings.
What does the income statement show? How much a company earned over a period of time, helping evaluate past performance
and predict future performance.
What are revenues? Increases in a company's resources from the sale of goods or services.
What are expenses? Costs incurred in the normal course of business to generate revenues.
What is net income? An overall measure of the performance of a company, indicating profit or loss.
What is the difference between gains/losses and Gains/losses are money made or lost outside of normal operations, while
revenues/expenses? revenues/expenses are related to regular business activities.
