ACCOUNTING EXAM 1 QUESTIONS AND ANSWERS
Fundamental Accounting Equation - (ANSWER)Assets = Liabilities + Owner's Equity
What are the 2 components of Stockholder's Equity? - (ANSWER)Retained Earnings and Common Stock
What is the group that currently creates Accounting Standards (FASB) - (ANSWER)Financial Accounting
Standards Board
What gives the board of directors the right to change a company's CEO - (ANSWER)Stockholders' vote
people into the Board and they decide who to hire in what position to run the company
Three things in the Revenue Recognition Concept (3) - (ANSWER)1.) Implied or Explicit Agreement
2.) Known Price
3.) Substantial Effort to Complete the Transaction
When do you recognize revenues and expenses under cash accounting and accrual accounting? -
(ANSWER)Cash Accounting - When the cash exchange is made
Accrual Accounting - When economic events have occurred
Where do you close dividends? - (ANSWER)Retained Earnings (c4)
What are the Closings for each Revenue, Income Summary, Expenses, and Dividends (If there are any
dividends) - (ANSWER)Revenue = c1
Expenses = c2a, c2b etc.
Income Summary = c3
Dividends (If any) = c4
A Debit to Retained earnings means... - (ANSWER)A Dividend was paid to shareholders
Dividends is classified as what activity in the statement of cash flows? - (ANSWER)Financing
Fundamental Accounting Equation - (ANSWER)Assets = Liabilities + Owner's Equity
What are the 2 components of Stockholder's Equity? - (ANSWER)Retained Earnings and Common Stock
What is the group that currently creates Accounting Standards (FASB) - (ANSWER)Financial Accounting
Standards Board
What gives the board of directors the right to change a company's CEO - (ANSWER)Stockholders' vote
people into the Board and they decide who to hire in what position to run the company
Three things in the Revenue Recognition Concept (3) - (ANSWER)1.) Implied or Explicit Agreement
2.) Known Price
3.) Substantial Effort to Complete the Transaction
When do you recognize revenues and expenses under cash accounting and accrual accounting? -
(ANSWER)Cash Accounting - When the cash exchange is made
Accrual Accounting - When economic events have occurred
Where do you close dividends? - (ANSWER)Retained Earnings (c4)
What are the Closings for each Revenue, Income Summary, Expenses, and Dividends (If there are any
dividends) - (ANSWER)Revenue = c1
Expenses = c2a, c2b etc.
Income Summary = c3
Dividends (If any) = c4
A Debit to Retained earnings means... - (ANSWER)A Dividend was paid to shareholders
Dividends is classified as what activity in the statement of cash flows? - (ANSWER)Financing
