Financial Accounting Exam Study
Questions and Answers Graded 2025
Accounting - Correct Ans-System that collects and processes (analyzes, measures, and
records) financial information about an organization and reports that information to
decision makers.
Accounting entity - Correct Ans-Is the organization for with financial data are to be
collected.
The four basic statements: - Correct Ans-1. Balance Sheet
2. Income Statement
3. Statement of Retained Earnings
4. Statement of Cash flows
Balance Sheet - Correct Ans-Reports the amount of assets, liabilities and stockholders'
equity of an accounting entry at a point in time.
Income Statement - Correct Ans-Reports the revenues less the expenses of the
accounting period.
Statement of Retained Earnings - Correct Ans-Reports the way that net income and the
distribution of dividends affected the financial position of the company during the
accounting period.
Statement of Cash Flows - Correct Ans-Reports inflows and outflows of cash during the
accounting period in the categories of operating, investing, and financing.
Basic Accounting Equation - Correct Ans-Assets = Liabilities + Stockholders' Equity
Assets - Correct Ans-Are the economic resources owned by the company. Each of
these economic resources is expected to provide future benefits to the firm.
Liabilities - Correct Ans-Are the company's debts or obligations. Which will be paid with
assets or services.
Stockholders' Equity (Owners' Equity) - Correct Ans-Indicates the amount of financing
provided by owners of the business and earnings. Is the sum of the contribute capital +
the retained earnings.
Accounting Period - Correct Ans-Is the time period cover by the financial statements.
Elements of the Income Statement - Correct Ans-Revenues, Expenses and Net Income.
, Revenues - Correct Ans-Earnings from the sale of goods or services to costumers.
Revenues are reported whether or not have yet been paid for.
Expenses - Correct Ans-Represent the dollar amount of resources the entity used to
earn revenue during the period.
Net Income ("the bottom line") - Correct Ans-Is the excess of total revenues over total
expenses.
Net Loss - Correct Ans-If total expenses exceed total revenues.
Retained Earning Equation - Correct Ans-Ending Retained Earnings = (Beginning of
Retained Earnings + Net Income) - Dividends
The Cash Flow Statement Equation - Correct Ans-+/- Cash flow from Operating
Activities (CFO)
+/- Cash flow from Investing Activities (CFI)
+/- Cash flow from Financing Activities (CFF)
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Change in Cash
Cash Flow from Operating Activities, and examples - Correct Ans-CFO- Are cash flow
that are directly related to earning income. Example, collecting cash from costumers,
pay salaries, pay bills, pay to suppliers.
Cash Flow from Investing Activities, and examples - Correct Ans-CFI- Are cash flow
related to the acquisition or sale of the company's productive assets. Example, the
purchase of additional equipment.
Cash Flow from Financing Activities, and examples - Correct Ans-CFF- Are cash flow
directly related to the financing of the enterprise itself. Example, the payment of money
to investors and creditors.
Notes - Correct Ans-"Footnotes" provide supplemental information about the financial
condition of a company.
GAAP - Correct Ans-Generally Accepted Accounting Principles, are the measurement
rules used to develop the information in financial statements.
SEC - Correct Ans-Security and Exchange Commission, is the U.S government agency
that determines the financial statements that public companies must provide to
stockholders, and the rules that they must use in producing those statements.
FASB - Correct Ans-Financial Accounting Standards Board, is the private sector body
given the primary responsibility to work out the detailed rules that become GAAP.
Questions and Answers Graded 2025
Accounting - Correct Ans-System that collects and processes (analyzes, measures, and
records) financial information about an organization and reports that information to
decision makers.
Accounting entity - Correct Ans-Is the organization for with financial data are to be
collected.
The four basic statements: - Correct Ans-1. Balance Sheet
2. Income Statement
3. Statement of Retained Earnings
4. Statement of Cash flows
Balance Sheet - Correct Ans-Reports the amount of assets, liabilities and stockholders'
equity of an accounting entry at a point in time.
Income Statement - Correct Ans-Reports the revenues less the expenses of the
accounting period.
Statement of Retained Earnings - Correct Ans-Reports the way that net income and the
distribution of dividends affected the financial position of the company during the
accounting period.
Statement of Cash Flows - Correct Ans-Reports inflows and outflows of cash during the
accounting period in the categories of operating, investing, and financing.
Basic Accounting Equation - Correct Ans-Assets = Liabilities + Stockholders' Equity
Assets - Correct Ans-Are the economic resources owned by the company. Each of
these economic resources is expected to provide future benefits to the firm.
Liabilities - Correct Ans-Are the company's debts or obligations. Which will be paid with
assets or services.
Stockholders' Equity (Owners' Equity) - Correct Ans-Indicates the amount of financing
provided by owners of the business and earnings. Is the sum of the contribute capital +
the retained earnings.
Accounting Period - Correct Ans-Is the time period cover by the financial statements.
Elements of the Income Statement - Correct Ans-Revenues, Expenses and Net Income.
, Revenues - Correct Ans-Earnings from the sale of goods or services to costumers.
Revenues are reported whether or not have yet been paid for.
Expenses - Correct Ans-Represent the dollar amount of resources the entity used to
earn revenue during the period.
Net Income ("the bottom line") - Correct Ans-Is the excess of total revenues over total
expenses.
Net Loss - Correct Ans-If total expenses exceed total revenues.
Retained Earning Equation - Correct Ans-Ending Retained Earnings = (Beginning of
Retained Earnings + Net Income) - Dividends
The Cash Flow Statement Equation - Correct Ans-+/- Cash flow from Operating
Activities (CFO)
+/- Cash flow from Investing Activities (CFI)
+/- Cash flow from Financing Activities (CFF)
----------------------------------------
Change in Cash
Cash Flow from Operating Activities, and examples - Correct Ans-CFO- Are cash flow
that are directly related to earning income. Example, collecting cash from costumers,
pay salaries, pay bills, pay to suppliers.
Cash Flow from Investing Activities, and examples - Correct Ans-CFI- Are cash flow
related to the acquisition or sale of the company's productive assets. Example, the
purchase of additional equipment.
Cash Flow from Financing Activities, and examples - Correct Ans-CFF- Are cash flow
directly related to the financing of the enterprise itself. Example, the payment of money
to investors and creditors.
Notes - Correct Ans-"Footnotes" provide supplemental information about the financial
condition of a company.
GAAP - Correct Ans-Generally Accepted Accounting Principles, are the measurement
rules used to develop the information in financial statements.
SEC - Correct Ans-Security and Exchange Commission, is the U.S government agency
that determines the financial statements that public companies must provide to
stockholders, and the rules that they must use in producing those statements.
FASB - Correct Ans-Financial Accounting Standards Board, is the private sector body
given the primary responsibility to work out the detailed rules that become GAAP.
