Accounting 201 FINAL EXAM QUESTIONS
WITH COMPLETE SOLUTIONS
entity - CORRECT ANSWER✔✔-a person, unit, organization or group
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proprietorship - CORRECT ANSWER✔✔-business owned by one person
| | | | | | |
partnership - CORRECT ANSWER✔✔-business owned by two or more persons or
| | | | | | | | | | |
entities
corporation - CORRECT ANSWER✔✔-business owned by one or more entities
| | | | | | | | | |
who own shares of stock in the business. Separate entity than it's owners, limited
| | | | | | | | | | | | |
liability
|
assets= - CORRECT ANSWER✔✔-liabilities + stockholder's equity
| | | | | |
how to find net income - CORRECT ANSWER✔✔-revenue - expenses
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how to find ending retained earnings - CORRECT ANSWER✔✔-beginning retained
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earnings + net income - dividends
| | | | |
how to find total stockholder's equity - CORRECT ANSWER✔✔-retained earnings
| | | | | | | | | |
+ common stock
| |
,the 4 financial statements should be prepared in which order - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-income statement, statement of retained earnings, balance sheet, | | | | | | | |
statement of cash flows | | |
financial accounting is principally concerned with: - CORRECT ANSWER✔✔-
| | | | | | | |
reporting to external users | | |
what do liquidity ratios measure - CORRECT ANSWER✔✔-the short term ability of
| | | | | | | | | | |
a company to pay it's obligations as they are due and meet unexpected cash
| | | | | | | | | | | | | | |
needs
calculate current ratio - CORRECT ANSWER✔✔-current assets / current liabilites
| | | | | | | | |
calculate working capital - CORRECT ANSWER✔✔-current assets - current
| | | | | | | | |
liabilites
what is earnings per share (EPS), what does it measure, and how do you calculate
| | | | | | | | | | | | | |
- CORRECT ANSWER✔✔-net income earned on each share of common stock;
| | | | | | | | | | | |
measures the company's profitability.
| | |
(net income - preferred stock dividends) / average common stock shares
| | | | | | | | | | |
outstanding
what do solvency ratios measures - CORRECT ANSWER✔✔-measure the ability of
| | | | | | | | | | |
the company to survive over a long period of time
| | | | | | | | |
,debt to total assets ratio definition & calculation - CORRECT ANSWER✔✔-
| | | | | | | | | |
measures the percentage of total financing provided by creditors.
| | | | | | | |
total liabilities / total assets
| | | |
free cash flow - CORRECT ANSWER✔✔-cash provided by operating activities
| | | | | | | | | |
adjusted for capital expenditures and dividends paid
| | | | | |
expense recognition principle (matching) requires...? - CORRECT ANSWER✔✔-
| | | | | | |
that costs (expenses) be recognized in the same accounting period of their
| | | | | | | | | | | |
related revenue |
faithful representation - CORRECT ANSWER✔✔-info is complete, neutral, and free
| | | | | | | | |
|from error |
going concern assumption - CORRECT ANSWER✔✔-principle that assumes the
| | | | | | | | |
enterprise will continue into the foreseeable future
| | | | | |
revenue recognition principle - CORRECT ANSWER✔✔-revenue is recognized in
| | | | | | | | |
the time period of when it is earned, which is not always the same time period it
| | | | | | | | | | | | | | | | |
is recieved
|
cost of goods sold is recorded as - CORRECT ANSWER✔✔-an expense
| | | | | | | | | |
long term assets held for use in the production or sale of other assets or services
| | | | | | | | | | | | | | |
|- CORRECT ANSWER✔✔-plant and equipment
| | | |
, how would you write the journal entry:
| | | | | |
completed payroll for Jordan Valley and billed $440 for services - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-Accounts receivable 440 | |
| Service Rev. 440 | |
how would you write the journal entry:
| | | | | |
received $200 cash in advance from Jones to set up accounting system - CORRECT
| | | | | | | | | | | | |
ANSWER✔✔-debit: Cash 200 credit: Unearned Rev. 200
| | | | | | |
how to find the book value - CORRECT ANSWER✔✔-cost of asset - accum.
| | | | | | | | | | | | |
depreciation
with cash-basis accounting, when do you record revenue and expenses? -
| | | | | | | | | | |
CORRECT ANSWER✔✔-recording revenue when cash is received, & record
| | | | | | | | |
expense when cash is paid | | | |
accrual-basis accounting | |
(preferred over cash-basis accounting) - CORRECT ANSWER✔✔-records rev. in the
| | | | | | | | |
|period when rev. is earned (rev. recognition principle) and matches expenses to
| | | | | | | | | | | |
the period in which the rev. was earned (expense recognition principle)
| | | | | | | | | |
temporary accounts include which accounts? (whatever is closed out at the end
| | | | | | | | | | | |
of the accounting period and moved to a different statement) - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-income statement accounts + dividend account which are closed | | | | | | | | |
out at the end of the accounting period to be put on the retained earnings
| | | | | | | | | | | | | | |
account
WITH COMPLETE SOLUTIONS
entity - CORRECT ANSWER✔✔-a person, unit, organization or group
| | | | | | | |
proprietorship - CORRECT ANSWER✔✔-business owned by one person
| | | | | | |
partnership - CORRECT ANSWER✔✔-business owned by two or more persons or
| | | | | | | | | | |
entities
corporation - CORRECT ANSWER✔✔-business owned by one or more entities
| | | | | | | | | |
who own shares of stock in the business. Separate entity than it's owners, limited
| | | | | | | | | | | | |
liability
|
assets= - CORRECT ANSWER✔✔-liabilities + stockholder's equity
| | | | | |
how to find net income - CORRECT ANSWER✔✔-revenue - expenses
| | | | | | | | |
how to find ending retained earnings - CORRECT ANSWER✔✔-beginning retained
| | | | | | | | | |
earnings + net income - dividends
| | | | |
how to find total stockholder's equity - CORRECT ANSWER✔✔-retained earnings
| | | | | | | | | |
+ common stock
| |
,the 4 financial statements should be prepared in which order - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-income statement, statement of retained earnings, balance sheet, | | | | | | | |
statement of cash flows | | |
financial accounting is principally concerned with: - CORRECT ANSWER✔✔-
| | | | | | | |
reporting to external users | | |
what do liquidity ratios measure - CORRECT ANSWER✔✔-the short term ability of
| | | | | | | | | | |
a company to pay it's obligations as they are due and meet unexpected cash
| | | | | | | | | | | | | | |
needs
calculate current ratio - CORRECT ANSWER✔✔-current assets / current liabilites
| | | | | | | | |
calculate working capital - CORRECT ANSWER✔✔-current assets - current
| | | | | | | | |
liabilites
what is earnings per share (EPS), what does it measure, and how do you calculate
| | | | | | | | | | | | | |
- CORRECT ANSWER✔✔-net income earned on each share of common stock;
| | | | | | | | | | | |
measures the company's profitability.
| | |
(net income - preferred stock dividends) / average common stock shares
| | | | | | | | | | |
outstanding
what do solvency ratios measures - CORRECT ANSWER✔✔-measure the ability of
| | | | | | | | | | |
the company to survive over a long period of time
| | | | | | | | |
,debt to total assets ratio definition & calculation - CORRECT ANSWER✔✔-
| | | | | | | | | |
measures the percentage of total financing provided by creditors.
| | | | | | | |
total liabilities / total assets
| | | |
free cash flow - CORRECT ANSWER✔✔-cash provided by operating activities
| | | | | | | | | |
adjusted for capital expenditures and dividends paid
| | | | | |
expense recognition principle (matching) requires...? - CORRECT ANSWER✔✔-
| | | | | | |
that costs (expenses) be recognized in the same accounting period of their
| | | | | | | | | | | |
related revenue |
faithful representation - CORRECT ANSWER✔✔-info is complete, neutral, and free
| | | | | | | | |
|from error |
going concern assumption - CORRECT ANSWER✔✔-principle that assumes the
| | | | | | | | |
enterprise will continue into the foreseeable future
| | | | | |
revenue recognition principle - CORRECT ANSWER✔✔-revenue is recognized in
| | | | | | | | |
the time period of when it is earned, which is not always the same time period it
| | | | | | | | | | | | | | | | |
is recieved
|
cost of goods sold is recorded as - CORRECT ANSWER✔✔-an expense
| | | | | | | | | |
long term assets held for use in the production or sale of other assets or services
| | | | | | | | | | | | | | |
|- CORRECT ANSWER✔✔-plant and equipment
| | | |
, how would you write the journal entry:
| | | | | |
completed payroll for Jordan Valley and billed $440 for services - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-Accounts receivable 440 | |
| Service Rev. 440 | |
how would you write the journal entry:
| | | | | |
received $200 cash in advance from Jones to set up accounting system - CORRECT
| | | | | | | | | | | | |
ANSWER✔✔-debit: Cash 200 credit: Unearned Rev. 200
| | | | | | |
how to find the book value - CORRECT ANSWER✔✔-cost of asset - accum.
| | | | | | | | | | | | |
depreciation
with cash-basis accounting, when do you record revenue and expenses? -
| | | | | | | | | | |
CORRECT ANSWER✔✔-recording revenue when cash is received, & record
| | | | | | | | |
expense when cash is paid | | | |
accrual-basis accounting | |
(preferred over cash-basis accounting) - CORRECT ANSWER✔✔-records rev. in the
| | | | | | | | |
|period when rev. is earned (rev. recognition principle) and matches expenses to
| | | | | | | | | | | |
the period in which the rev. was earned (expense recognition principle)
| | | | | | | | | |
temporary accounts include which accounts? (whatever is closed out at the end
| | | | | | | | | | | |
of the accounting period and moved to a different statement) - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-income statement accounts + dividend account which are closed | | | | | | | | |
out at the end of the accounting period to be put on the retained earnings
| | | | | | | | | | | | | | |
account
