ACCT 212 Midterm Week 4
(Complete Solutions)
ACCT 212 Financial Accounting
DeVry Students
Question 1
pts
(TCO 1) The Accounting Equation is used to develop the organization's financial reports. (1) Describe
what liabilities value would be if Assets are $50,000 and Owners' Equity is $25,000 by showing the
Accounting Equation (10 points) and (2) provide an example of two liability accounts. (10 points)
Your Answer:
1. The accounting equation is Assets=Liabilities + Owners'Equity
$50, 000=L+$25,000
In order to find the liability value you will subtract the owners equity value from the
Assets value.
Liabilities=$50,000-$25,000
Liabilities=$25,000
2. Examples of liability accounts are Accounts payable such as when a company
purchases inventory or supplies on credit
Accrued Expenses such as utility payments are another example.
, Textbook pages 11-12. Liabilities = $50,000 - $25,000 = $25,000. Notes Payable
and Bonds are examples.
Question 2
pts
(TCO 1) The financial statements present a company to the public in financial terms. (1) Which financial
statement should be prepared first and why (10 points), and (2) explain what information this financial
statement provides. (10 points)
Your Answer:
1. The income statement of operations is the first to be prepared as itcompares the
revenues and expenses for the specified period. The income statement reports
revenues and gains as well as expenses and losses. We find the net income by
subtracting the expenses from revenue. Net income is the most important item in a
financial statement.
Textbook pages 15-21. Income Statement.Compares revenue to expenses.
Question 3
pts
(TCO 1) The accounting profession follows a set of guidelines for measurement and disclosure of
financial information called the Generally Accepted Accounting Principles (GAAP). (1) Explain what the
International Financial Reporting Standards (IFRS) are (10 points) and (2) provide an example of its
application. (10 points)
Your Answer:
The International Financial Reporting Standards are accounting guidelines formulated
by the International Accounting Standards Board. These Standards have been adopted
by most countries across the world. The goal is to maintain stability and transparency
throughout the financial world.
IFRS allows a company to report revenue sooner, so consequently, a balance sheet
under this system might show a higher stream of revenue than GAAP's. IFRS also has
different requirements for expenses; for example, if a company is spending money on
development or an investment for the future, it doesn't necessarily have to be reported
as an expense
https://www.investopedia.com/terms/i/ifrs.asp
Textbook pages 6-9. Standards that will make the global economy report using
the same standards. The intention is to make raising capital easier for third-world
(Complete Solutions)
ACCT 212 Financial Accounting
DeVry Students
Question 1
pts
(TCO 1) The Accounting Equation is used to develop the organization's financial reports. (1) Describe
what liabilities value would be if Assets are $50,000 and Owners' Equity is $25,000 by showing the
Accounting Equation (10 points) and (2) provide an example of two liability accounts. (10 points)
Your Answer:
1. The accounting equation is Assets=Liabilities + Owners'Equity
$50, 000=L+$25,000
In order to find the liability value you will subtract the owners equity value from the
Assets value.
Liabilities=$50,000-$25,000
Liabilities=$25,000
2. Examples of liability accounts are Accounts payable such as when a company
purchases inventory or supplies on credit
Accrued Expenses such as utility payments are another example.
, Textbook pages 11-12. Liabilities = $50,000 - $25,000 = $25,000. Notes Payable
and Bonds are examples.
Question 2
pts
(TCO 1) The financial statements present a company to the public in financial terms. (1) Which financial
statement should be prepared first and why (10 points), and (2) explain what information this financial
statement provides. (10 points)
Your Answer:
1. The income statement of operations is the first to be prepared as itcompares the
revenues and expenses for the specified period. The income statement reports
revenues and gains as well as expenses and losses. We find the net income by
subtracting the expenses from revenue. Net income is the most important item in a
financial statement.
Textbook pages 15-21. Income Statement.Compares revenue to expenses.
Question 3
pts
(TCO 1) The accounting profession follows a set of guidelines for measurement and disclosure of
financial information called the Generally Accepted Accounting Principles (GAAP). (1) Explain what the
International Financial Reporting Standards (IFRS) are (10 points) and (2) provide an example of its
application. (10 points)
Your Answer:
The International Financial Reporting Standards are accounting guidelines formulated
by the International Accounting Standards Board. These Standards have been adopted
by most countries across the world. The goal is to maintain stability and transparency
throughout the financial world.
IFRS allows a company to report revenue sooner, so consequently, a balance sheet
under this system might show a higher stream of revenue than GAAP's. IFRS also has
different requirements for expenses; for example, if a company is spending money on
development or an investment for the future, it doesn't necessarily have to be reported
as an expense
https://www.investopedia.com/terms/i/ifrs.asp
Textbook pages 6-9. Standards that will make the global economy report using
the same standards. The intention is to make raising capital easier for third-world
