ACCT 2301 FORMULAS EXAM QUESTIONS WELL ANSWERED LATEST UPDATE 2026
The Accounting Equation - Answers Assets = Liabilities + Stockholders' Equity
Net Income - Answers Revenues - Expenses
Stockholders' Equity - Answers Common Stock + Retained Earnings
Retained Earnings - Answers Revenues - Expenses - Dividends
or
Net Income - Dividends
Interest on Note - Answers Note Value x Annual Interest Rate x Fraction of Year
Net Revenue - Answers Total Revenue - Sales Discounts - Sales Allowances
Receivables Turnover Ratio - Answers Net Credit Sales / Average Accounts Receivable
Average Collection Period - Answers 365 / Receivables Turnover Ratio
Total Inventory Available for Sale - Answers Beginning Inventory + Purchases During the Year
or
Ending Inventory + Costs of Goods Sold
Gross Profit - Answers Net Revenue - Costs of Goods Sold
Gross Profit Ratio - Answers Gross Profit / Net Sales x 100
Profit Margin - Answers Net Income / Net Sales
Operating Income - Answers Gross Profit - Operating Expenses
Income (before Income Taxes) - Answers Operating Income + Nonoperating Net Income
Nonoperating Net Income - Answers Nonoperating Revenues - Expenses
Weighted-Average Cost - Answers Costs of goods available for sale / Number of units available for
sale
Inventory Turnover Ratio - Answers Costs of Goods Sold / Average Inventory
Average Days in Inventory - Answers 365 / Inventory Turnover Ratio
Net Assets - Answers Assets acquired - Liabilities assumed
Depreciation Expense - Answers (Asset's Cost - Residual Value) / Service life
or
Depreciable cost / Service life
Return on Assets - Answers Net Income / Average Total Assets
or
Profit margin x Asset Turnover Ratio
Depreciation rate per unit - Answers (Asset's Cost - Residual Value) / Total units expected to be
produced
or
Depreciable cost / Total units expected to be produced
Working Capital - Answers Current Assets - Current Liabilities
Current Ratio - Answers Current Assets / Current Liabilities
Acid-Test Ratio - Answers (Cash + Current Investments + Accounts Receivable) / Current Liabilities
Interest Expense (on a bond) - Answers Carrying Value x Market Rate
Cash Paid for Bond - Answers Face Amount x Stated Rate
Issue Price of Bond - Answers Present value of principal + Present value of interest payments
Present value of principal - Answers Face value of bond x PV of $1 (based on the Present Value Table)
Present value of interest payments - Answers Interest paid per period x PV of annuity (based on the
Present Value Table)
Debt to equity ratio - Answers Total Liabilities / Stockholders' Equity
Times interest earned ratio - Answers (Net Income + Interest Expense + Tax Expense) / Interest
Expense
Authorized Stock - Answers Issued + Unissued
Issued Stock - Answers Outstanding + Treasury
Return on equity - Answers Net Income / Average Stockholders' Equity
Earnings per share - Answers (Net Income - Dividends on preferred stock) / Average shares of
common stock outstanding
Price-earnings ratio - Answers Stock price / Earnings per share
Shares outstanding - Answers Shares issued - treasury stock
Net cash flows from Operating Activities (Indirect method) - Answers Net Income
+ Depreciation expense
The Accounting Equation - Answers Assets = Liabilities + Stockholders' Equity
Net Income - Answers Revenues - Expenses
Stockholders' Equity - Answers Common Stock + Retained Earnings
Retained Earnings - Answers Revenues - Expenses - Dividends
or
Net Income - Dividends
Interest on Note - Answers Note Value x Annual Interest Rate x Fraction of Year
Net Revenue - Answers Total Revenue - Sales Discounts - Sales Allowances
Receivables Turnover Ratio - Answers Net Credit Sales / Average Accounts Receivable
Average Collection Period - Answers 365 / Receivables Turnover Ratio
Total Inventory Available for Sale - Answers Beginning Inventory + Purchases During the Year
or
Ending Inventory + Costs of Goods Sold
Gross Profit - Answers Net Revenue - Costs of Goods Sold
Gross Profit Ratio - Answers Gross Profit / Net Sales x 100
Profit Margin - Answers Net Income / Net Sales
Operating Income - Answers Gross Profit - Operating Expenses
Income (before Income Taxes) - Answers Operating Income + Nonoperating Net Income
Nonoperating Net Income - Answers Nonoperating Revenues - Expenses
Weighted-Average Cost - Answers Costs of goods available for sale / Number of units available for
sale
Inventory Turnover Ratio - Answers Costs of Goods Sold / Average Inventory
Average Days in Inventory - Answers 365 / Inventory Turnover Ratio
Net Assets - Answers Assets acquired - Liabilities assumed
Depreciation Expense - Answers (Asset's Cost - Residual Value) / Service life
or
Depreciable cost / Service life
Return on Assets - Answers Net Income / Average Total Assets
or
Profit margin x Asset Turnover Ratio
Depreciation rate per unit - Answers (Asset's Cost - Residual Value) / Total units expected to be
produced
or
Depreciable cost / Total units expected to be produced
Working Capital - Answers Current Assets - Current Liabilities
Current Ratio - Answers Current Assets / Current Liabilities
Acid-Test Ratio - Answers (Cash + Current Investments + Accounts Receivable) / Current Liabilities
Interest Expense (on a bond) - Answers Carrying Value x Market Rate
Cash Paid for Bond - Answers Face Amount x Stated Rate
Issue Price of Bond - Answers Present value of principal + Present value of interest payments
Present value of principal - Answers Face value of bond x PV of $1 (based on the Present Value Table)
Present value of interest payments - Answers Interest paid per period x PV of annuity (based on the
Present Value Table)
Debt to equity ratio - Answers Total Liabilities / Stockholders' Equity
Times interest earned ratio - Answers (Net Income + Interest Expense + Tax Expense) / Interest
Expense
Authorized Stock - Answers Issued + Unissued
Issued Stock - Answers Outstanding + Treasury
Return on equity - Answers Net Income / Average Stockholders' Equity
Earnings per share - Answers (Net Income - Dividends on preferred stock) / Average shares of
common stock outstanding
Price-earnings ratio - Answers Stock price / Earnings per share
Shares outstanding - Answers Shares issued - treasury stock
Net cash flows from Operating Activities (Indirect method) - Answers Net Income
+ Depreciation expense
