Accounting 101 Final Exam Study Guide complete verified solutions + rationales
What is accounting? - (ANSWER)the action or process of keeping financial accounts
revenues - (ANSWER)inflows of assets resulting from the sale of goods and services
expenses - (ANSWER)outflow of assets resulting from the sale of goods and services
internal user - (ANSWER)managerial accounting
external user - (ANSWER)financial accounting
who is responsible for GAAP - (ANSWER)FASB
accounting equation - (ANSWER)assets = liabilities + owners equity
international accounting standards board (IFRS) is responsible for - (ANSWER)developing a single set of
worldwide accounting standards
These standards will help companies to reduce accounting costs, make it easier to acquire foreign
companies, and facilitate comparisons between foreign companies - (ANSWER)(IFRS) international
accounting standards board
primary objective of financial reporting - (ANSWER)provide economic information to permit users of the
information to make informed decisions
what makes information relevant - (ANSWER)it must be able to make a difference in a decision
assets are recorded at historical/original cost because - (ANSWER)it is objective and verifiable
financial information should be understandable to whom - (ANSWER)those willing to spend the
necessary time to understand it
, Accounting 101 Final Exam Study Guide complete verified solutions + rationales
balance sheet - (ANSWER)lists assets, liabilities, and owner's equity
income statement - (ANSWER)revenues minus expenses equal net income
net income - (ANSWER)revenues - expenses
order of statement preparation - (ANSWER)income statement, statement of retained earnings, balance
sheet and statement of cash flows
account and types of accounts - (ANSWER)a record or statement of financial expenditure or receipts
relating to a particular period or purpose
real, personal, and nominal
how transactions affect the accounting equation - (ANSWER)the balance is maintained because every
business transaction affects at least two of a company's accounts such as:
when a company borrows money from a bank
the company's assets will increase and its liabilities will increase by the same amount
left side - (ANSWER)debit
right side - (ANSWER)credit
initial recording of transaction is made in a journal/general journal is - (ANSWER)journal entry,
journalizing this entry is then posted to ledger/general ledger
purpose of trial balance - (ANSWER)lists all accounts with their balances, assets first, then liabilities and
stockholders equity. shows whether total debits equal total credits
What is accounting? - (ANSWER)the action or process of keeping financial accounts
revenues - (ANSWER)inflows of assets resulting from the sale of goods and services
expenses - (ANSWER)outflow of assets resulting from the sale of goods and services
internal user - (ANSWER)managerial accounting
external user - (ANSWER)financial accounting
who is responsible for GAAP - (ANSWER)FASB
accounting equation - (ANSWER)assets = liabilities + owners equity
international accounting standards board (IFRS) is responsible for - (ANSWER)developing a single set of
worldwide accounting standards
These standards will help companies to reduce accounting costs, make it easier to acquire foreign
companies, and facilitate comparisons between foreign companies - (ANSWER)(IFRS) international
accounting standards board
primary objective of financial reporting - (ANSWER)provide economic information to permit users of the
information to make informed decisions
what makes information relevant - (ANSWER)it must be able to make a difference in a decision
assets are recorded at historical/original cost because - (ANSWER)it is objective and verifiable
financial information should be understandable to whom - (ANSWER)those willing to spend the
necessary time to understand it
, Accounting 101 Final Exam Study Guide complete verified solutions + rationales
balance sheet - (ANSWER)lists assets, liabilities, and owner's equity
income statement - (ANSWER)revenues minus expenses equal net income
net income - (ANSWER)revenues - expenses
order of statement preparation - (ANSWER)income statement, statement of retained earnings, balance
sheet and statement of cash flows
account and types of accounts - (ANSWER)a record or statement of financial expenditure or receipts
relating to a particular period or purpose
real, personal, and nominal
how transactions affect the accounting equation - (ANSWER)the balance is maintained because every
business transaction affects at least two of a company's accounts such as:
when a company borrows money from a bank
the company's assets will increase and its liabilities will increase by the same amount
left side - (ANSWER)debit
right side - (ANSWER)credit
initial recording of transaction is made in a journal/general journal is - (ANSWER)journal entry,
journalizing this entry is then posted to ledger/general ledger
purpose of trial balance - (ANSWER)lists all accounts with their balances, assets first, then liabilities and
stockholders equity. shows whether total debits equal total credits
