Intro to Financial Reporting Chapter 1
Test Practice Exam Actual Questions
and Answers 2026
What is accounting? -
correct answer ✅planning, recording, analyzing, and interpreting
financial information, also known as "the language of business"
What is net income? -
correct answer ✅Revenues - Expenses
What is retained earnings? -
correct answer ✅Net Income - Dividends
What are assets? -
correct answer ✅all things the firm has or owns.tangible or
intangible. value measured in dollars.value is specific.based on
liquidity (when they can be converted to cash).
What are liabilities? -
correct answer ✅all the firms debts
What is stockholder's equity? -
correct answer ✅the values of a companies assets after liabilities
are paid, also known as a company's book value
, Intro to Financial Reporting Chapter 1
Test Practice Exam Actual Questions
and Answers 2026
What is the purpose of a balance sheet? -
correct answer ✅Present the financial position of the company on
a particular date
What is the purpose of an income statement? -
correct answer ✅An income statement reports the company's
revenues and expenses for a period of time and shows the
company's profitability
(or lack of). The income statement's purpose is to demonstrate the
financial success or failure of the company over a specific
period of time.
What is a statement of retained earnings? -
correct answer ✅beginning retained earnings + net income -
dividends = end retained earnings
What are dividends? -
correct answer ✅Dividends are distributions of a corporations
profits to its stockholders.
Test Practice Exam Actual Questions
and Answers 2026
What is accounting? -
correct answer ✅planning, recording, analyzing, and interpreting
financial information, also known as "the language of business"
What is net income? -
correct answer ✅Revenues - Expenses
What is retained earnings? -
correct answer ✅Net Income - Dividends
What are assets? -
correct answer ✅all things the firm has or owns.tangible or
intangible. value measured in dollars.value is specific.based on
liquidity (when they can be converted to cash).
What are liabilities? -
correct answer ✅all the firms debts
What is stockholder's equity? -
correct answer ✅the values of a companies assets after liabilities
are paid, also known as a company's book value
, Intro to Financial Reporting Chapter 1
Test Practice Exam Actual Questions
and Answers 2026
What is the purpose of a balance sheet? -
correct answer ✅Present the financial position of the company on
a particular date
What is the purpose of an income statement? -
correct answer ✅An income statement reports the company's
revenues and expenses for a period of time and shows the
company's profitability
(or lack of). The income statement's purpose is to demonstrate the
financial success or failure of the company over a specific
period of time.
What is a statement of retained earnings? -
correct answer ✅beginning retained earnings + net income -
dividends = end retained earnings
What are dividends? -
correct answer ✅Dividends are distributions of a corporations
profits to its stockholders.
