Financial Accounting Final Exam (Ivy Tech) Questions and Answers 100% Solved correctly

Revenues - Answer-Gross increase in equity from a company's business activities that earn income; also called sales. Expenses - Answer-Outflows or using up of assets as part of operations of a business to generate sales. Accounts Receivable - Answer-Amounts to be received in the future due to the sale of goods or services Accounting Equation - Answer-Assets = Liabilities + Equity Income Statement - Answer-describes a company's revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities Accounts on Income Statement - Answer-Revenues - Expenses Balance Sheet - Answer-Financial statement that lists types and dollar amounts of assets, liabilities, and equity at a specific date. Accounts on balance sheet - Answer-assets, liabilities, equity Primary Objective of Financial Reporting - Answer-to provide information that is useful to investors and creditors for decision making Expanded Accounting Equation - Answer-Assets = Liabilities + Common Stock + Revenues - Expenses - Dividends FASB (Financial Accounting Standards Board) - Answer-sets accounting standards (GAAP) in the U.S.T account - Answer-debit left, credit right Normal Balance of Expenses - Answer-Debit (decrease equity) Normal balance of Revenues - Answer-credit Normal Balance of dividends - Answer-Dr. (it decreases owner's equity) normal balance of assets - Answer-Debit Increases. Credit decreases. NB: Debit. normal balance of liabilities - Answer-credit increases, debit decreases NB:Credit Journal - Answer-Record in which transactions are entered before they are posted to ledger accounts; also called book of original entry. Journalizing - Answer-Recording transactions in a journal Trial Balance - Answer-a list of accounts and their balances at a given time Trial Balance Order of Accounts - Answer-assets, liabilities, equity, dividends, revenue, expenses journal entry: purchase of equipment - Answer-debit equipment, credit cash Accrual Basis Accounting - Answer-reporting revenue when it is earned and expenses when they are incurred (basis for GAAP) salary expense adjustment - Answer-debit salaries expense, credit salaries payable revenues and expenses are closed to what account? - Answer-income summary