ACG 2021 EXAM 1 PATTERSON EXAM
SCRIPT 2026 COMPLETE QUESTIONS AND
ANSWERS COMPREHENSIVE TEST PAPER
VERIFIED SOLUTIONS GRADED A+
⩥ Managerial Accounting. Answer: Information for internal users such
as managers and employees.
⩥ Corporation. Answer: a business owned by Shareholder (issue stock)
-Advantages: easy to transfer ownership (buy/ sell stock), easy to raise
money (issue stock), no personal liability
-Disadvantages: tough to start, double taxation.
⩥ Proprietorships, partnerships. Answer: - 1 or 2 owners
o Advantages: easy to establish, tax advantage, more control
o Disadvantage: personal liability (could lose everything)
⩥ Securities and Exchange Commission (SEC). Answer: - An agency of
the U.S. government that is responsible for monitoring the U.S. financial
markets and accounting standards- setting bodies (watch dog)
⩥ Financial Accounting Standards board (FASB). Answer: - A private
organization that is the main standard setting body in the U.S., and is
,given the authority to establish most of the accounting rules and
guidelines. (makes rules)
⩥ Generally Accepted Accounting Principles (GAAP). Answer: - A set
of rules and practice, having substantial authoritative support, that the
accounting profession recognizes as a general guide for financial
purposes. (the actual rules)
- Most important rule: use of accrual accounting
⩥ Sarbanes- Oxley Act. Answer: - Top management must certify the
accuracy of financial information (must sign)
- Penalties for fraudulent activities increased
- Independent oversight by the board's selection and supervision of the
independent auditor.
- Designed to reduce unethical behavior
⩥ Three types of business activity. Answer: - Financing, Operating, and
investing
⩥ Financing Activities. Answer: - Borrowing money (debt financing)
o Amounts owed are liabilities
o Owed to crditors
- Issuing (selling stock) shares of stock for cash
o Payments to stockholder are dividends
, - Usually only involves either: 1. bank or 2. stockholders
⩥ Investing Activities. Answer: - Purchase of resources a company
needs to operate
o Buy/ sell PPE (equipment..)
o Investments are an example
⩥ Operating Activities. Answer: - Revenues and expenses are main two
- Others include: Inventory, liabilities (payables not including banks),
receivables, net income, net loss.
⩥ Financial Statements. Answer: - Income Statement, retained earnings
(or statement of stockholders equity), balance sheet, statement of cash
flow
⩥ Income Statement. Answer: - Measures a company's financial
performance over a specific period of time period.
- Revenue first amount on right (credit), expense second amounts on left
(debit)
- Revenues- expenses = net income
- If net income is negative it is called net loss
- Net income will either go to dividends or retained earnings
SCRIPT 2026 COMPLETE QUESTIONS AND
ANSWERS COMPREHENSIVE TEST PAPER
VERIFIED SOLUTIONS GRADED A+
⩥ Managerial Accounting. Answer: Information for internal users such
as managers and employees.
⩥ Corporation. Answer: a business owned by Shareholder (issue stock)
-Advantages: easy to transfer ownership (buy/ sell stock), easy to raise
money (issue stock), no personal liability
-Disadvantages: tough to start, double taxation.
⩥ Proprietorships, partnerships. Answer: - 1 or 2 owners
o Advantages: easy to establish, tax advantage, more control
o Disadvantage: personal liability (could lose everything)
⩥ Securities and Exchange Commission (SEC). Answer: - An agency of
the U.S. government that is responsible for monitoring the U.S. financial
markets and accounting standards- setting bodies (watch dog)
⩥ Financial Accounting Standards board (FASB). Answer: - A private
organization that is the main standard setting body in the U.S., and is
,given the authority to establish most of the accounting rules and
guidelines. (makes rules)
⩥ Generally Accepted Accounting Principles (GAAP). Answer: - A set
of rules and practice, having substantial authoritative support, that the
accounting profession recognizes as a general guide for financial
purposes. (the actual rules)
- Most important rule: use of accrual accounting
⩥ Sarbanes- Oxley Act. Answer: - Top management must certify the
accuracy of financial information (must sign)
- Penalties for fraudulent activities increased
- Independent oversight by the board's selection and supervision of the
independent auditor.
- Designed to reduce unethical behavior
⩥ Three types of business activity. Answer: - Financing, Operating, and
investing
⩥ Financing Activities. Answer: - Borrowing money (debt financing)
o Amounts owed are liabilities
o Owed to crditors
- Issuing (selling stock) shares of stock for cash
o Payments to stockholder are dividends
, - Usually only involves either: 1. bank or 2. stockholders
⩥ Investing Activities. Answer: - Purchase of resources a company
needs to operate
o Buy/ sell PPE (equipment..)
o Investments are an example
⩥ Operating Activities. Answer: - Revenues and expenses are main two
- Others include: Inventory, liabilities (payables not including banks),
receivables, net income, net loss.
⩥ Financial Statements. Answer: - Income Statement, retained earnings
(or statement of stockholders equity), balance sheet, statement of cash
flow
⩥ Income Statement. Answer: - Measures a company's financial
performance over a specific period of time period.
- Revenue first amount on right (credit), expense second amounts on left
(debit)
- Revenues- expenses = net income
- If net income is negative it is called net loss
- Net income will either go to dividends or retained earnings
