CBAD 201 Financial Accounting Final Exam
Practice – Chapters 1–12 Questions & Tips
Accounting - ANSWER ✨✔---an information system that measures business trANSWERactions or
activities; process all of the data into reports, communicate to interested parties/decision makers
Who uses accounting information? - ANSWER ✨✔---- investors
-management
-regulatory bodies/government
Proprietorship - ANSWER ✨✔---have one owner, unlimited liability, pay individual taxes
Partnership - ANSWER ✨✔---two or more owners, unlimited liability, pay individual taxes
Limited-liability company (LLC) - ANSWER ✨✔---many owners, limited liability
Corporation - ANSWER ✨✔---many owners-stockholders, owners have no liability, owners do not
pay taxes, can raise more money
The entity assumption - ANSWER ✨✔---the entity (business) is seperate from the owners
, The going-concern assumption - ANSWER ✨✔---going to continue in business (operate), based on
the financials
Historical cost principle - ANSWER ✨✔---whatever is purchased is recorded at cost, what was paid,
actual/original cost
Stable monetary-until assumption - ANSWER ✨✔---everything we record is in dollars, we have no
inflation (stuff raising prices)
Assets - ANSWER ✨✔---something of value, something we own, something we used in my
business, positive
Liabilities - ANSWER ✨✔---something you owe, something you're responsible for, debt/loan
Owners' [Stockholders'] Equity - ANSWER ✨✔---what's left over, what I own after bills are paid
Paid-in Capital - ANSWER ✨✔---money that has been invested into "my" business; common
stock/equity
Retained Earnings - ANSWER ✨✔---"holding back", net income (make or lose money"
- increases equity
Revenues - ANSWER ✨✔---what can you earn from doing your business, selling ; paycheck
-increase equity
Expenses - ANSWER ✨✔---all the additions to pay to earn my revenue; rent/bills
-decrease equity
Dividends - ANSWER ✨✔---only in statement of retained earnings; pay offs
Practice – Chapters 1–12 Questions & Tips
Accounting - ANSWER ✨✔---an information system that measures business trANSWERactions or
activities; process all of the data into reports, communicate to interested parties/decision makers
Who uses accounting information? - ANSWER ✨✔---- investors
-management
-regulatory bodies/government
Proprietorship - ANSWER ✨✔---have one owner, unlimited liability, pay individual taxes
Partnership - ANSWER ✨✔---two or more owners, unlimited liability, pay individual taxes
Limited-liability company (LLC) - ANSWER ✨✔---many owners, limited liability
Corporation - ANSWER ✨✔---many owners-stockholders, owners have no liability, owners do not
pay taxes, can raise more money
The entity assumption - ANSWER ✨✔---the entity (business) is seperate from the owners
, The going-concern assumption - ANSWER ✨✔---going to continue in business (operate), based on
the financials
Historical cost principle - ANSWER ✨✔---whatever is purchased is recorded at cost, what was paid,
actual/original cost
Stable monetary-until assumption - ANSWER ✨✔---everything we record is in dollars, we have no
inflation (stuff raising prices)
Assets - ANSWER ✨✔---something of value, something we own, something we used in my
business, positive
Liabilities - ANSWER ✨✔---something you owe, something you're responsible for, debt/loan
Owners' [Stockholders'] Equity - ANSWER ✨✔---what's left over, what I own after bills are paid
Paid-in Capital - ANSWER ✨✔---money that has been invested into "my" business; common
stock/equity
Retained Earnings - ANSWER ✨✔---"holding back", net income (make or lose money"
- increases equity
Revenues - ANSWER ✨✔---what can you earn from doing your business, selling ; paycheck
-increase equity
Expenses - ANSWER ✨✔---all the additions to pay to earn my revenue; rent/bills
-decrease equity
Dividends - ANSWER ✨✔---only in statement of retained earnings; pay offs
