ACC 101 Exam questions with
answers graded A+
Business Organizations - ANS✅✅Proprietorship, Partnership, S Corporation, Limited Liability
Company and Corporation
Corporation - ANS✅✅review characteristics. Corporation owners have limited liability but are
subject to double taxation.
Accounting - ANS✅✅the information system that measures business activities, processes that
information into reports and financial statements, and communicates the results to decisions
makers
Historical Cost Principle - ANS✅✅An accounting principle that states that companies should record
assets at their cost.
Entity Assumption - ANS✅✅Organization stands apart from other organizations and individuals as
a separate economic unit
Continuity (Going Concern) Assumption - ANS✅✅states that businesses are assumed to continue
into the foreseeable future
Stable Monetary Unit Assumption - ANS✅✅The reason for ignoring the effect of inflation in the
accounting records, based on the assumption that the dollar's purchasing power is relatively stable.
What is GAAP? - ANS✅✅Generally Accepted Accounting Principles
What is the FASB? - ANS✅✅The FASB is an independent full-time organization that was
established in 1973 and has determine GAAP since then.
IFRS? - ANS✅✅International Financial Reporting Standards.
IASB? - ANS✅✅International Accounting Standards Board
,Timeliness - ANS✅✅Issuance of interim reports example of what enhancing quality of relevance
Comparability - ANS✅✅Qualitative characteristics being employed when companies in the same
industry are using the same accounting principles
Verifiability - ANS✅✅Product company has attempted to determine the replacement cost of
inventory. Three different appraisers arrive at substantially different amounts for this value. The
president, nevertheless, decides to report the middle value for external reporting purposes. Which
qualitative characteristics of information is lacking in these data
Know the accounting equation - ANS✅✅Assets = Liabilities + Stockholder's Equity
Also know that - ANS✅✅Assets - Liabilities = Stockholder's Equity
: 2016 beginning assets = $50,000 and ending assets = $60,000; 2016 beginning liabilities = $30,000
and ending liabilities = $35,000. What is the change in Stockholder's Equity in 2016? Answer =
$5,000 increase. - ANS✅✅$50,000 = $30,000 + x
X = $20,000 beginning stockholder's equity
$60,000 = $35,000 + x
X = $25,000 ending stockholder's equity
$25,000 - $20,000 = $5,000 increase in stockholder's equity
A company buys equipment with a note payable - ANS✅✅Assets increase, Liabilities increase,
Stockholder's Equity is unchanged.
A company pays on an account payable - ANS✅✅Assets decrease, Liabilities decrease,
Stockholder's Equity is unchanged.
A company receives cash in exchange for providing services to a customer - ANS✅✅Assets
increase as cash goes up. Stockholder's Equity increases due to the increase in revenue.
A company buys a building with cash - ANS✅✅- Total Assets, Liabilities, and Stockholder's Equity
are unchanged. One asset increases while another asset decreases
, A company sells stock for cash - ANS✅✅Assets increase, Liabilities are unchanged, Stockholder's
Equity increases.
- A company buys inventory on account - ANS✅✅Assets increase, Liabilities increase, Stockholder's
Equity is unchanged.
A company borrows money from a bank - ANS✅✅Assets (Cash) increase but Liabilities (Notes
Payable) increase as well.
A company sells inventory - ANS✅✅Stockholder's equity is increased by the revenue earned and
decreased by expenses incurred.
- A company receives payment from a customer on account - ANS✅✅No affect on total assets,
liabilities, or Stockholder's Equity. One asset (cash) increases while another (accounts receivable)
decreases.
A company incurs wages expense which will not be paid until the next period. - ANS✅✅Liabilities
go up and expenses increase which in turn causes Retained Earnings to decrease. If the company
incurs wages expense and it is paid in the current period, both Assests (Cash) and Retained Earnings
decrease
If supplies purchased on account are not recorded, assets are understated and liabilities are
understated. Think of the journal entry which was not recorded - ANS✅✅Supplies xxx
Accounts Payable xxx
A consulting firm performs services on account (i.e. no cash is received at the time the services were
performed. Journal entry is: - ANS✅✅Accounts Receivable
Sales Revenue
What is net income? - ANS✅✅Revenues - Expenses
What is net loss? - ANS✅✅when expenses are greater than revenue
Liabilities - ANS✅✅obligations of the company - amount owed to parties outside the company
answers graded A+
Business Organizations - ANS✅✅Proprietorship, Partnership, S Corporation, Limited Liability
Company and Corporation
Corporation - ANS✅✅review characteristics. Corporation owners have limited liability but are
subject to double taxation.
Accounting - ANS✅✅the information system that measures business activities, processes that
information into reports and financial statements, and communicates the results to decisions
makers
Historical Cost Principle - ANS✅✅An accounting principle that states that companies should record
assets at their cost.
Entity Assumption - ANS✅✅Organization stands apart from other organizations and individuals as
a separate economic unit
Continuity (Going Concern) Assumption - ANS✅✅states that businesses are assumed to continue
into the foreseeable future
Stable Monetary Unit Assumption - ANS✅✅The reason for ignoring the effect of inflation in the
accounting records, based on the assumption that the dollar's purchasing power is relatively stable.
What is GAAP? - ANS✅✅Generally Accepted Accounting Principles
What is the FASB? - ANS✅✅The FASB is an independent full-time organization that was
established in 1973 and has determine GAAP since then.
IFRS? - ANS✅✅International Financial Reporting Standards.
IASB? - ANS✅✅International Accounting Standards Board
,Timeliness - ANS✅✅Issuance of interim reports example of what enhancing quality of relevance
Comparability - ANS✅✅Qualitative characteristics being employed when companies in the same
industry are using the same accounting principles
Verifiability - ANS✅✅Product company has attempted to determine the replacement cost of
inventory. Three different appraisers arrive at substantially different amounts for this value. The
president, nevertheless, decides to report the middle value for external reporting purposes. Which
qualitative characteristics of information is lacking in these data
Know the accounting equation - ANS✅✅Assets = Liabilities + Stockholder's Equity
Also know that - ANS✅✅Assets - Liabilities = Stockholder's Equity
: 2016 beginning assets = $50,000 and ending assets = $60,000; 2016 beginning liabilities = $30,000
and ending liabilities = $35,000. What is the change in Stockholder's Equity in 2016? Answer =
$5,000 increase. - ANS✅✅$50,000 = $30,000 + x
X = $20,000 beginning stockholder's equity
$60,000 = $35,000 + x
X = $25,000 ending stockholder's equity
$25,000 - $20,000 = $5,000 increase in stockholder's equity
A company buys equipment with a note payable - ANS✅✅Assets increase, Liabilities increase,
Stockholder's Equity is unchanged.
A company pays on an account payable - ANS✅✅Assets decrease, Liabilities decrease,
Stockholder's Equity is unchanged.
A company receives cash in exchange for providing services to a customer - ANS✅✅Assets
increase as cash goes up. Stockholder's Equity increases due to the increase in revenue.
A company buys a building with cash - ANS✅✅- Total Assets, Liabilities, and Stockholder's Equity
are unchanged. One asset increases while another asset decreases
, A company sells stock for cash - ANS✅✅Assets increase, Liabilities are unchanged, Stockholder's
Equity increases.
- A company buys inventory on account - ANS✅✅Assets increase, Liabilities increase, Stockholder's
Equity is unchanged.
A company borrows money from a bank - ANS✅✅Assets (Cash) increase but Liabilities (Notes
Payable) increase as well.
A company sells inventory - ANS✅✅Stockholder's equity is increased by the revenue earned and
decreased by expenses incurred.
- A company receives payment from a customer on account - ANS✅✅No affect on total assets,
liabilities, or Stockholder's Equity. One asset (cash) increases while another (accounts receivable)
decreases.
A company incurs wages expense which will not be paid until the next period. - ANS✅✅Liabilities
go up and expenses increase which in turn causes Retained Earnings to decrease. If the company
incurs wages expense and it is paid in the current period, both Assests (Cash) and Retained Earnings
decrease
If supplies purchased on account are not recorded, assets are understated and liabilities are
understated. Think of the journal entry which was not recorded - ANS✅✅Supplies xxx
Accounts Payable xxx
A consulting firm performs services on account (i.e. no cash is received at the time the services were
performed. Journal entry is: - ANS✅✅Accounts Receivable
Sales Revenue
What is net income? - ANS✅✅Revenues - Expenses
What is net loss? - ANS✅✅when expenses are greater than revenue
Liabilities - ANS✅✅obligations of the company - amount owed to parties outside the company
