Financial & Managerial Accounting Exam 1 2026-
2027 Questions With Correct Answers A+ Grade
Accounting - an information and measurement system that identifies, records and communicates
relevant, reliable and comparable information about an organizations activities
Recordkeeping/Bookkeeping - the recording of transactions and events, either manually or electronically
External Users - not directly involved in running the organization, need to all coincide with one method
Internal Information Users - those directly involved in managing and operating an organization, not so
concerned with others
Ethics - beliefs that distinguish right from wrong
Measurement Principle (cost principle) - accounting information is based on actual cost
Revenue (sales) Recognition - provides guidance on when a company must recognize revenue
Expense Recognition Principle (matching principle) - record the expenses it incurred to generate the
revenue reported
Full Disclosure - prescribes that a company report the details behind financial statements that would
impact users' decisions.
Accounting Equation (simple) - Assets = Liabilities + Equity
Assets - resources a company owns or controls
, Liabilities - creditors' claims on assets (reflect company obligations to provide assets, products or
services to others)
Equity (net assets/residual equity) - the owner's claim on assets, has two parts: -contributed capital
-retained earnings
Contributed Capital - amount that stockholders invest in the company included under common stock
Retained Earnings - refer to income (revenues less expenses) that has not been distributed to its
stockholders
net income - cash dividends = retained earnings
Dividends - distribution of assets to stockholders
Revenues - Increase retained earnings and are resources generated from a company's earnings activities
Expenses - decrease retained earnings and are the cost of assets or services used to earn revenues
Accounting Equation (full and complicated) - Assets = liabilities + Equity [contributed capital + retained
earnings]
Assets = liabilities + common stock + retained earnings [- dividends + revenue - expenses]
Net Income - when revenues exceed expenses (increase equity)
revenue - expenses
Net loss - when expenses exceed revenues (decrease equity)
Income Statement - describes a company's revenues and expenses along with the resulting net income
or loss over a period of time due to earnings activities
2027 Questions With Correct Answers A+ Grade
Accounting - an information and measurement system that identifies, records and communicates
relevant, reliable and comparable information about an organizations activities
Recordkeeping/Bookkeeping - the recording of transactions and events, either manually or electronically
External Users - not directly involved in running the organization, need to all coincide with one method
Internal Information Users - those directly involved in managing and operating an organization, not so
concerned with others
Ethics - beliefs that distinguish right from wrong
Measurement Principle (cost principle) - accounting information is based on actual cost
Revenue (sales) Recognition - provides guidance on when a company must recognize revenue
Expense Recognition Principle (matching principle) - record the expenses it incurred to generate the
revenue reported
Full Disclosure - prescribes that a company report the details behind financial statements that would
impact users' decisions.
Accounting Equation (simple) - Assets = Liabilities + Equity
Assets - resources a company owns or controls
, Liabilities - creditors' claims on assets (reflect company obligations to provide assets, products or
services to others)
Equity (net assets/residual equity) - the owner's claim on assets, has two parts: -contributed capital
-retained earnings
Contributed Capital - amount that stockholders invest in the company included under common stock
Retained Earnings - refer to income (revenues less expenses) that has not been distributed to its
stockholders
net income - cash dividends = retained earnings
Dividends - distribution of assets to stockholders
Revenues - Increase retained earnings and are resources generated from a company's earnings activities
Expenses - decrease retained earnings and are the cost of assets or services used to earn revenues
Accounting Equation (full and complicated) - Assets = liabilities + Equity [contributed capital + retained
earnings]
Assets = liabilities + common stock + retained earnings [- dividends + revenue - expenses]
Net Income - when revenues exceed expenses (increase equity)
revenue - expenses
Net loss - when expenses exceed revenues (decrease equity)
Income Statement - describes a company's revenues and expenses along with the resulting net income
or loss over a period of time due to earnings activities
