Accounting 201 FINAL EXAM Questions
With 100% Solved Solutions 2026-2027
Edition.
entity - Answer a person, unit, organization or group
proprietorship - Answer business owned by one person
partnership - Answer business owned by two or more persons or entities
corporation - Answer business owned by one or more entities who own shares of stock in the
business. Separate entity than it's owners, limited liability
assets= - Answer liabilities + stockholder's equity
how to find net income - Answer revenue - expenses
how to find ending retained earnings - Answer beginning retained earnings + net income -
dividends
how to find total stockholder's equity - Answer retained earnings + common stock
the 4 financial statements should be prepared in which order - Answer income statement,
statement of retained earnings, balance sheet, statement of cash flows
financial accounting is principally concerned with: - Answer reporting to external users
what do liquidity ratios measure - Answer the short term ability of a company to pay it's
obligations as they are due and meet unexpected cash needs
calculate current ratio - Answer current assets / current liabilites
calculate working capital - Answer current assets - current liabilites
what is earnings per share (EPS), what does it measure, and how do you calculate - Answer
net income earned on each share of common stock; measures the company's profitability.
,(net income - preferred stock dividends) / average common stock shares outstanding
what do solvency ratios measures - Answer measure the ability of the company to survive
over a long period of time
debt to total assets ratio definition & calculation - Answer measures the percentage of total
financing provided by creditors.
total liabilities / total assets
free cash flow - Answer cash provided by operating activities adjusted for capital expenditures
and dividends paid
expense recognition principle (matching) requires...? - Answer that costs (expenses) be
recognized in the same accounting period of their related revenue
faithful representation - Answer info is complete, neutral, and free from error
going concern assumption - Answer principle that assumes the enterprise will continue into
the foreseeable future
revenue recognition principle - Answer revenue is recognized in the time period of when it is
earned, which is not always the same time period it is recieved
cost of goods sold is recorded as - Answer an expense
long term assets held for use in the production or sale of other assets or services - Answer
plant and equipment
how would you write the journal entry:
completed payroll for Jordan Valley and billed $440 for services - Answer Accounts receivable
440
Service Rev. 440
how would you write the journal entry:
received $200 cash in advance from Jones to set up accounting system - Answer debit: Cash
200 credit: Unearned Rev. 200
how to find the book value - Answer cost of asset - accum. depreciation
, with cash-basis accounting, when do you record revenue and expenses? - Answer recording
revenue when cash is received, & record expense when cash is paid
accrual-basis accounting
(preferred over cash-basis accounting) - Answer records rev. in the period when rev. is earned
(rev. recognition principle) and matches expenses to the period in which the rev. was earned
(expense recognition principle)
temporary accounts include which accounts? (whatever is closed out at the end of the
accounting period and moved to a different statement) - Answer income statement accounts +
dividend account which are closed out at the end of the accounting period to be put on the
retained earnings account
how to solve net income for the accrual basis of accounting - Answer revenue earned -
expenses
A corp. purchased a 3 year (36 months) insurance policy on Dec. 1, Year A for $3,600. The corp.
debited prepaid insurance account in recording the original transaction. The adjusting entry for
Dec. 31 Year A will include the transaction: - Answer Credit to prepaid insurance for $100.
3 years = 36 months
$3, months = $100 per month
when you fail to adjust a prepaid expense that has partially expired, which was originally
recorded by debiting prepaid expenses, what happens to the assets and expenses? - Answer
overstatement of assets, understatement of expenses
what is the order of the accounting cycle steps (1-9) in correct sequence - Answer 1. analyze
transactions 2. journalize transactions 3. post to ledger 4. prepare trial balance 5.
journalize/post adjusting entries 6. prepare adjusted trial balance 7. prepare financial
statements 8. journalize/post closing entires 9. prepare post-closing trial balance
service enterprise is a company that makes most of it's revenue by: - Answer providing a
service (firm, doctor, realtor)
merchandising company - Answer company that makes most of its revenue by selling products
(inventory) ex: Walmart, Target, Schnucks
what two things do you have to remember to subtract from sales revenue when calculating net
sales - Answer sales revenue - sales returns and allowances - sales discounts
With 100% Solved Solutions 2026-2027
Edition.
entity - Answer a person, unit, organization or group
proprietorship - Answer business owned by one person
partnership - Answer business owned by two or more persons or entities
corporation - Answer business owned by one or more entities who own shares of stock in the
business. Separate entity than it's owners, limited liability
assets= - Answer liabilities + stockholder's equity
how to find net income - Answer revenue - expenses
how to find ending retained earnings - Answer beginning retained earnings + net income -
dividends
how to find total stockholder's equity - Answer retained earnings + common stock
the 4 financial statements should be prepared in which order - Answer income statement,
statement of retained earnings, balance sheet, statement of cash flows
financial accounting is principally concerned with: - Answer reporting to external users
what do liquidity ratios measure - Answer the short term ability of a company to pay it's
obligations as they are due and meet unexpected cash needs
calculate current ratio - Answer current assets / current liabilites
calculate working capital - Answer current assets - current liabilites
what is earnings per share (EPS), what does it measure, and how do you calculate - Answer
net income earned on each share of common stock; measures the company's profitability.
,(net income - preferred stock dividends) / average common stock shares outstanding
what do solvency ratios measures - Answer measure the ability of the company to survive
over a long period of time
debt to total assets ratio definition & calculation - Answer measures the percentage of total
financing provided by creditors.
total liabilities / total assets
free cash flow - Answer cash provided by operating activities adjusted for capital expenditures
and dividends paid
expense recognition principle (matching) requires...? - Answer that costs (expenses) be
recognized in the same accounting period of their related revenue
faithful representation - Answer info is complete, neutral, and free from error
going concern assumption - Answer principle that assumes the enterprise will continue into
the foreseeable future
revenue recognition principle - Answer revenue is recognized in the time period of when it is
earned, which is not always the same time period it is recieved
cost of goods sold is recorded as - Answer an expense
long term assets held for use in the production or sale of other assets or services - Answer
plant and equipment
how would you write the journal entry:
completed payroll for Jordan Valley and billed $440 for services - Answer Accounts receivable
440
Service Rev. 440
how would you write the journal entry:
received $200 cash in advance from Jones to set up accounting system - Answer debit: Cash
200 credit: Unearned Rev. 200
how to find the book value - Answer cost of asset - accum. depreciation
, with cash-basis accounting, when do you record revenue and expenses? - Answer recording
revenue when cash is received, & record expense when cash is paid
accrual-basis accounting
(preferred over cash-basis accounting) - Answer records rev. in the period when rev. is earned
(rev. recognition principle) and matches expenses to the period in which the rev. was earned
(expense recognition principle)
temporary accounts include which accounts? (whatever is closed out at the end of the
accounting period and moved to a different statement) - Answer income statement accounts +
dividend account which are closed out at the end of the accounting period to be put on the
retained earnings account
how to solve net income for the accrual basis of accounting - Answer revenue earned -
expenses
A corp. purchased a 3 year (36 months) insurance policy on Dec. 1, Year A for $3,600. The corp.
debited prepaid insurance account in recording the original transaction. The adjusting entry for
Dec. 31 Year A will include the transaction: - Answer Credit to prepaid insurance for $100.
3 years = 36 months
$3, months = $100 per month
when you fail to adjust a prepaid expense that has partially expired, which was originally
recorded by debiting prepaid expenses, what happens to the assets and expenses? - Answer
overstatement of assets, understatement of expenses
what is the order of the accounting cycle steps (1-9) in correct sequence - Answer 1. analyze
transactions 2. journalize transactions 3. post to ledger 4. prepare trial balance 5.
journalize/post adjusting entries 6. prepare adjusted trial balance 7. prepare financial
statements 8. journalize/post closing entires 9. prepare post-closing trial balance
service enterprise is a company that makes most of it's revenue by: - Answer providing a
service (firm, doctor, realtor)
merchandising company - Answer company that makes most of its revenue by selling products
(inventory) ex: Walmart, Target, Schnucks
what two things do you have to remember to subtract from sales revenue when calculating net
sales - Answer sales revenue - sales returns and allowances - sales discounts
