ACCOUNTING UPDATED ACTUAL EXAM
Questions And CORRECT Answers
Assets - CORRECT ANSWERS Things company owns & uses to generate revenue
Liabilities - CORRECT ANSWERS Amount that company owes
Equity - CORRECT ANSWERS Amount invested in company by owners; owners claim no
assets
Accounting equation - CORRECT ANSWERS Assets = liabilities + equity
Truism in business - CORRECT ANSWERS Company never receives greater than it gives &
never gives greater than it receives
4 Rules of debits & credits - CORRECT ANSWERS 1. Debit amount received; credit amount
given up
2. Debuts on left; credits on the right
3. In each transactions; list debits first (good) & credits last (bad)
4. Total debits = total credits
Making an ethical decision - CORRECT ANSWERS 1. Identify ethical concerns- use personal
ethics to recognize concern
2. Analyze options- consider all good & bad consequences
3. Make ethical decision- choose best option given circumstances
, Fraud - CORRECT ANSWERS Intentional manipulation- focus on prevention. Once fraud is
committed, loses are rarely retrieved.
Fraud Triangle - CORRECT ANSWERS Opportunity (low risk of being caught), Financial
Pressure (incentive), Rationalization (making situation justifiable)
GAAP (generally accepted accounting principles) - CORRECT ANSWERS Financial
accounting is governed by concepts & rules.
1. Relevant info affects decision of user
2. Reliable info trusted by users
3. Comparable info aids in contrasting organizations
SEC- Securities and Exchange Commission - CORRECT ANSWERS Federal agency congress
has charged to set reporting rules for org that sell ownership shares to public
FASB (Financial Accounting Standards Board) - CORRECT ANSWERS Independent group of
full-time members responsible for setting accounting rules
IASB (international accounting standards board) - CORRECT ANSWERS Group that
identifies preferred accounting practices & encourages global acceptance; issues IFRS
Measurement/cost principle - CORRECT ANSWERS Accounting info based on actual cost.
-if cash is given for a service, cost is measured by cash paid
-if other is exchanged (car traded for truck), cost is measured as cash value of what is given up
or received
This ensure reliability, verifiability
Questions And CORRECT Answers
Assets - CORRECT ANSWERS Things company owns & uses to generate revenue
Liabilities - CORRECT ANSWERS Amount that company owes
Equity - CORRECT ANSWERS Amount invested in company by owners; owners claim no
assets
Accounting equation - CORRECT ANSWERS Assets = liabilities + equity
Truism in business - CORRECT ANSWERS Company never receives greater than it gives &
never gives greater than it receives
4 Rules of debits & credits - CORRECT ANSWERS 1. Debit amount received; credit amount
given up
2. Debuts on left; credits on the right
3. In each transactions; list debits first (good) & credits last (bad)
4. Total debits = total credits
Making an ethical decision - CORRECT ANSWERS 1. Identify ethical concerns- use personal
ethics to recognize concern
2. Analyze options- consider all good & bad consequences
3. Make ethical decision- choose best option given circumstances
, Fraud - CORRECT ANSWERS Intentional manipulation- focus on prevention. Once fraud is
committed, loses are rarely retrieved.
Fraud Triangle - CORRECT ANSWERS Opportunity (low risk of being caught), Financial
Pressure (incentive), Rationalization (making situation justifiable)
GAAP (generally accepted accounting principles) - CORRECT ANSWERS Financial
accounting is governed by concepts & rules.
1. Relevant info affects decision of user
2. Reliable info trusted by users
3. Comparable info aids in contrasting organizations
SEC- Securities and Exchange Commission - CORRECT ANSWERS Federal agency congress
has charged to set reporting rules for org that sell ownership shares to public
FASB (Financial Accounting Standards Board) - CORRECT ANSWERS Independent group of
full-time members responsible for setting accounting rules
IASB (international accounting standards board) - CORRECT ANSWERS Group that
identifies preferred accounting practices & encourages global acceptance; issues IFRS
Measurement/cost principle - CORRECT ANSWERS Accounting info based on actual cost.
-if cash is given for a service, cost is measured by cash paid
-if other is exchanged (car traded for truck), cost is measured as cash value of what is given up
or received
This ensure reliability, verifiability
