MGA 201 Final Exam Questions With
Correct Answers
Basic |Accounting |Equation |- |CORRECT |ANSWER✔✔-Assets= |Liabilities |+ |Stockholders |Equity
Corporations |- |CORRECT |ANSWER✔✔-Separate |entity |from |both |a |legal |and |accounting |
perspective. |Owners |of |corporations |(stockholders) |are |not |personally |responsible |for |debts |of
|the |corporation
Separate |Entity |Assumption |- |CORRECT |ANSWER✔✔-requires |that |a |business's |financial |
reports |include |only |the |activities |of |the |business |and |not |those |of |its |stockholders
Assets |- |CORRECT |ANSWER✔✔-Resources |controlled |by |the |company |that |have |measurable |
value |and |are |expected |to |provide |future |benefits. |E.x. |cash, |supplies, |equiptment
Liabilities |- |CORRECT |ANSWER✔✔-Amounts |owed |by |the |business |to |creditors. |E.x. |notes |
payable, |accounts |payable
Stockholders |Equity |- |CORRECT |ANSWER✔✔-Owners |claim |to |the |business |resources. |E.x. |
common |stock, |retained |earnings
Revenues, |Expenses, |and |Net |Income |- |CORRECT |ANSWER✔✔-Revenues |- |Expenses |= |Net |
Income
Revenues |- |CORRECT |ANSWER✔✔-Sales |of |goods |or |services |to |customers. |Measured |at |the |
amount |the |business |charges |the |customer.
,Expenses |- |CORRECT |ANSWER✔✔-The |costs |of |business |necessary |to |earn |revenues, |including
|wages |to |employees, |advertising, |and |utilities
Dividends |- |CORRECT |ANSWER✔✔-Distributions |of |a |company's |earnings |to |its |stockholders |as
|a |return |on |their |investment. |NOT |and |expense
Financial |Statements |Prepared |in |this |Order |- |CORRECT |ANSWER✔✔-Income |Statement |- |
Statement |of |Retained |Earnings |- |Balance |Sheet |- |Statement |of |Cash |Flows
The |Income |Statement |- |CORRECT |ANSWER✔✔-Reports |the |amount |of |revenues |less |
expenses |for |a |period |of |time.
The |Statement |of |Retained |Earnings |- |CORRECT |ANSWER✔✔-Reports |the |way |that |net |income
|and |the |distribution |of |dividends |affected |the |financial |position |of |the |company |during |the |
period
The |Balance |Sheet |- |CORRECT |ANSWER✔✔-Reports |at |a |point |in |time: |1. |What |the |business |
owns(assets)
2. |What |it |owes |to |creditors(liabilities)
3. |What |is |left |over |for |the |owners |of |the |company's |stock(stockholders |equity)
The |Statement |of |Cash |Flows |- |CORRECT |ANSWER✔✔-Summarizes |how |a |business's |
operating, |investing, |and |financing |activities |caused |its |cash |balance |to |change |over |a |
particular |period |of |time.
Accounting |Transactions |- |CORRECT |ANSWER✔✔-A |transaction |is |a |business |activity |that |
affects |the |basic |accounting |equation.
Duality |of |Effects |- |CORRECT |ANSWER✔✔-Every |transaction |has |at |least |two |effects |on |the |
basic |accounting |equation.
, A |= |L |+ |SE |- |CORRECT |ANSWER✔✔-Assets |must |equal |liabilities |and |stockholders |equity |for |
every |accounting |transaction.
Systematic |Accounting |Process |- |CORRECT |ANSWER✔✔-1. |Analyze |2. |Record |3. |Summarize
Current |Ratio |- |CORRECT |ANSWER✔✔-Current |Assets/ |Current |Liabilities
A |higher |current |ratio |generally |means |a |better |ability |to |pay.
Preparing |a |Classified |Balance |Sheet |- |CORRECT |ANSWER✔✔--Current |assets |will |be |used |up |
or |turned |into |cash |within |the |next |12 |months |of |the |balance |sheet |date.
-Current |Liabilities |are |debts |and |other |obligations |that |will |be |paid |or |fulfilled |within |12 |
months |of |the |balance |sheet |date.
Operating |Activites |- |CORRECT |ANSWER✔✔-Operating |activities |include |buying |goods |and |
services |from |suppliers |and |employees |and |selling |goods |and |services |to |customers |and |then |
collecting |cash |from |them.
Income |Statement |Accounts |- |CORRECT |ANSWER✔✔-Who: |name |of |business
What: |title |of |business
When: |accounting |period
Total |amount |earned, |total |expenses |incurred, |difference |between |total |revenues |and |total |
expenses |(net |income)
Time |Period |Assumption |- |CORRECT |ANSWER✔✔-Dividing |the |company's |long |life |into |shorter
|chunks |of |time |such |as |months, |quarters, |and |years.
Cash |Basis |Accounting |- |CORRECT |ANSWER✔✔--Cash |basis |accounting |records |revenues |when
|cash |is |received |and |expenses |when |cash |is |paid.
Correct Answers
Basic |Accounting |Equation |- |CORRECT |ANSWER✔✔-Assets= |Liabilities |+ |Stockholders |Equity
Corporations |- |CORRECT |ANSWER✔✔-Separate |entity |from |both |a |legal |and |accounting |
perspective. |Owners |of |corporations |(stockholders) |are |not |personally |responsible |for |debts |of
|the |corporation
Separate |Entity |Assumption |- |CORRECT |ANSWER✔✔-requires |that |a |business's |financial |
reports |include |only |the |activities |of |the |business |and |not |those |of |its |stockholders
Assets |- |CORRECT |ANSWER✔✔-Resources |controlled |by |the |company |that |have |measurable |
value |and |are |expected |to |provide |future |benefits. |E.x. |cash, |supplies, |equiptment
Liabilities |- |CORRECT |ANSWER✔✔-Amounts |owed |by |the |business |to |creditors. |E.x. |notes |
payable, |accounts |payable
Stockholders |Equity |- |CORRECT |ANSWER✔✔-Owners |claim |to |the |business |resources. |E.x. |
common |stock, |retained |earnings
Revenues, |Expenses, |and |Net |Income |- |CORRECT |ANSWER✔✔-Revenues |- |Expenses |= |Net |
Income
Revenues |- |CORRECT |ANSWER✔✔-Sales |of |goods |or |services |to |customers. |Measured |at |the |
amount |the |business |charges |the |customer.
,Expenses |- |CORRECT |ANSWER✔✔-The |costs |of |business |necessary |to |earn |revenues, |including
|wages |to |employees, |advertising, |and |utilities
Dividends |- |CORRECT |ANSWER✔✔-Distributions |of |a |company's |earnings |to |its |stockholders |as
|a |return |on |their |investment. |NOT |and |expense
Financial |Statements |Prepared |in |this |Order |- |CORRECT |ANSWER✔✔-Income |Statement |- |
Statement |of |Retained |Earnings |- |Balance |Sheet |- |Statement |of |Cash |Flows
The |Income |Statement |- |CORRECT |ANSWER✔✔-Reports |the |amount |of |revenues |less |
expenses |for |a |period |of |time.
The |Statement |of |Retained |Earnings |- |CORRECT |ANSWER✔✔-Reports |the |way |that |net |income
|and |the |distribution |of |dividends |affected |the |financial |position |of |the |company |during |the |
period
The |Balance |Sheet |- |CORRECT |ANSWER✔✔-Reports |at |a |point |in |time: |1. |What |the |business |
owns(assets)
2. |What |it |owes |to |creditors(liabilities)
3. |What |is |left |over |for |the |owners |of |the |company's |stock(stockholders |equity)
The |Statement |of |Cash |Flows |- |CORRECT |ANSWER✔✔-Summarizes |how |a |business's |
operating, |investing, |and |financing |activities |caused |its |cash |balance |to |change |over |a |
particular |period |of |time.
Accounting |Transactions |- |CORRECT |ANSWER✔✔-A |transaction |is |a |business |activity |that |
affects |the |basic |accounting |equation.
Duality |of |Effects |- |CORRECT |ANSWER✔✔-Every |transaction |has |at |least |two |effects |on |the |
basic |accounting |equation.
, A |= |L |+ |SE |- |CORRECT |ANSWER✔✔-Assets |must |equal |liabilities |and |stockholders |equity |for |
every |accounting |transaction.
Systematic |Accounting |Process |- |CORRECT |ANSWER✔✔-1. |Analyze |2. |Record |3. |Summarize
Current |Ratio |- |CORRECT |ANSWER✔✔-Current |Assets/ |Current |Liabilities
A |higher |current |ratio |generally |means |a |better |ability |to |pay.
Preparing |a |Classified |Balance |Sheet |- |CORRECT |ANSWER✔✔--Current |assets |will |be |used |up |
or |turned |into |cash |within |the |next |12 |months |of |the |balance |sheet |date.
-Current |Liabilities |are |debts |and |other |obligations |that |will |be |paid |or |fulfilled |within |12 |
months |of |the |balance |sheet |date.
Operating |Activites |- |CORRECT |ANSWER✔✔-Operating |activities |include |buying |goods |and |
services |from |suppliers |and |employees |and |selling |goods |and |services |to |customers |and |then |
collecting |cash |from |them.
Income |Statement |Accounts |- |CORRECT |ANSWER✔✔-Who: |name |of |business
What: |title |of |business
When: |accounting |period
Total |amount |earned, |total |expenses |incurred, |difference |between |total |revenues |and |total |
expenses |(net |income)
Time |Period |Assumption |- |CORRECT |ANSWER✔✔-Dividing |the |company's |long |life |into |shorter
|chunks |of |time |such |as |months, |quarters, |and |years.
Cash |Basis |Accounting |- |CORRECT |ANSWER✔✔--Cash |basis |accounting |records |revenues |when
|cash |is |received |and |expenses |when |cash |is |paid.
