Rutgers Introduction to Financial Accounting
Exam 1 Questions And Answers
Monetary Unit Assumption requires that companies include accounting records only
transaction data that can be expressed in fair terms of money
Economic Entity Assumption requires that activities of the entity kept separate and
distinct from the other activities of its owner and all other economic entities
Forms of Business Ownership proprietorship, partnership, corporation
Proprietorship owned by one person; owner receives all profits and is responsible for all
debts
Partnership owned by two or more persons; unlimited personal liability; partnership
agreement
Corporation ownership divided into shares; separate legal entity organized under corp.
law; limited liability
, Rutgers Introduction to Financial Accounting
Exam 1 Questions And Answers
Basic Accounting Equation Assets = Liabilities + Stockholder's Equity
Transactions business's economic events recorded by accountants; external or internal
Retained Earnings Revenues - Expenses - Dividends
Financial Statements Income Statement; retained earnings; balance sheet; statement of
cash flows
Income Statement reports profitability of the company's operations over a specific time
Income Statement Format Revenues - Expenses = Net Income (Loss)
Retained Earnings Statement reports the changes in retained earning for a specific period
of time; same time period as income statement
Exam 1 Questions And Answers
Monetary Unit Assumption requires that companies include accounting records only
transaction data that can be expressed in fair terms of money
Economic Entity Assumption requires that activities of the entity kept separate and
distinct from the other activities of its owner and all other economic entities
Forms of Business Ownership proprietorship, partnership, corporation
Proprietorship owned by one person; owner receives all profits and is responsible for all
debts
Partnership owned by two or more persons; unlimited personal liability; partnership
agreement
Corporation ownership divided into shares; separate legal entity organized under corp.
law; limited liability
, Rutgers Introduction to Financial Accounting
Exam 1 Questions And Answers
Basic Accounting Equation Assets = Liabilities + Stockholder's Equity
Transactions business's economic events recorded by accountants; external or internal
Retained Earnings Revenues - Expenses - Dividends
Financial Statements Income Statement; retained earnings; balance sheet; statement of
cash flows
Income Statement reports profitability of the company's operations over a specific time
Income Statement Format Revenues - Expenses = Net Income (Loss)
Retained Earnings Statement reports the changes in retained earning for a specific period
of time; same time period as income statement
