Financial Accounting Exam 1
Questions and Answers
accrued expenses - ANSWERSexpenses incurred but not yet paid or recorded at the statement
date (ex: interest, taxes, utilities, salaries)
creditors - ANSWERSpersons or entities to whom a company owes money
amount owed to creditors - ANSWERSliabilities
note payable - ANSWERSliability to the bank
bonds payable - ANSWERSdebt securities sold to investors that must be repaid at a particular
date some years in the future
common stock - ANSWERSthe total amount paid in by stockholders for the shares they purchase
dividends - ANSWERSpayments of cash from a corporation to its stockholders
assets - ANSWERSresources owned by a business
revenue - ANSWERSthe increase in assets or decrease in liabilities resulting from the sale of
goods or the performance of services in the normal course of business
supplies - ANSWERSassets used in day-to-day operations
, inventory - ANSWERSassets that are goods available for future sales to customers
account receivable - ANSWERSthe right to receive money in the future
expenses - ANSWERSthe cost of assets consumed or services used in the process of generating
revenues
accounts payable - ANSWERSthe obligation to pay for goods
income statement - ANSWERSto show how successfully your business performed during a
period of time, you report its revenues and expenses and show net income or loss for a period
of time
retained earnings statement - ANSWERSto indicate how much previous income was distributed
to you and the owners of your business in the form of dividends in a specific period of time, and
how much was retained in the business to allow for future growth
balance sheet - ANSWERSto present a picture at a point in time of what your business owns
(assets) and what it owes (liabilities)
statement of cash flows - ANSWERSto show where your business obtained cash during a period
of time and how that cash was used
stockholders' equity - ANSWERSthe owners' claim to assets
basic accounting equation - ANSWERSassets = liabilities + stockholders equity
Questions and Answers
accrued expenses - ANSWERSexpenses incurred but not yet paid or recorded at the statement
date (ex: interest, taxes, utilities, salaries)
creditors - ANSWERSpersons or entities to whom a company owes money
amount owed to creditors - ANSWERSliabilities
note payable - ANSWERSliability to the bank
bonds payable - ANSWERSdebt securities sold to investors that must be repaid at a particular
date some years in the future
common stock - ANSWERSthe total amount paid in by stockholders for the shares they purchase
dividends - ANSWERSpayments of cash from a corporation to its stockholders
assets - ANSWERSresources owned by a business
revenue - ANSWERSthe increase in assets or decrease in liabilities resulting from the sale of
goods or the performance of services in the normal course of business
supplies - ANSWERSassets used in day-to-day operations
, inventory - ANSWERSassets that are goods available for future sales to customers
account receivable - ANSWERSthe right to receive money in the future
expenses - ANSWERSthe cost of assets consumed or services used in the process of generating
revenues
accounts payable - ANSWERSthe obligation to pay for goods
income statement - ANSWERSto show how successfully your business performed during a
period of time, you report its revenues and expenses and show net income or loss for a period
of time
retained earnings statement - ANSWERSto indicate how much previous income was distributed
to you and the owners of your business in the form of dividends in a specific period of time, and
how much was retained in the business to allow for future growth
balance sheet - ANSWERSto present a picture at a point in time of what your business owns
(assets) and what it owes (liabilities)
statement of cash flows - ANSWERSto show where your business obtained cash during a period
of time and how that cash was used
stockholders' equity - ANSWERSthe owners' claim to assets
basic accounting equation - ANSWERSassets = liabilities + stockholders equity
