ACCT 311 Exam #1 Questions and Answers Solved Correctly Latest Update 2025-2026
general objective of financial reporting - Answers to provide useful and understandable
information for external users decision making
specific objective of financial reporting - Answers to provide information about
- economic resources, obligations and equality
- financial performance and earnings during a specified period
- cash flows
Qualitative characteristics of accounting information - Answers 1. Accounting information
- benefits > costs
2. Understandability
3. Decision Usefulness
- Relevance
- Comparability
- Representational faithfulness
relevance - Answers the most important characteristic.
- predictive value, confirmatory value, materiality
comparability - Answers verifiability, timeliness, and understandability
representational faithfulness - Answers completeness, free of errors, and neutrality
10 basic financial elements - Answers assets, liabilities, owners equity, investments by owners,
distributions to owners, comprehensive income, revenues, expenses, gains, losses
recognition - Answers to be recorded or not?
to be recognized: needs to be a measurable element with relevancy and reliability
measurement - Answers at how much?
reporting - Answers how to present? in which financial statements?
accrual accounting - Answers when you earn revenue no matter when you receive it
cash-basis accounting - Answers revenue you only receive in cash
, revenue recognition principle - Answers revenues should be recognized when transactions that
cause them occur and when revenues are earned, not necessarily when cash is received
Revenue recognition - scenario 1 - Answers cash is received the same date when the revenue is
earned
Dr. Cash
Cr. revenue/sales
- increase on same date no adj. entry
Revenue recognition - scenario 2 - Answers cash is received after the delivery of merchandise or
services
Dr. A/R
Cr. Revenue (accrued revenue)
adj. entry
Dr. Cash
Cr. A/R
Revenue recognition - scenario 3 - Answers cash is received before the company delivers goods
or services
Dr. Cash
Cr. unearned revenue
adj. entry
Dr. Unearned revenue
Cr. Revenue
matching principle - Answers resources consumed to earn revenues in an accounting period
should be recorded in that period as expenses, regardless of when cash is paid
Matching principle - scenario 1 - Answers cash is paid on the same data as the expense is
incurred
Dr. Expense
Cr. Cash
Matching principle - Scenario 2 - Answers cash is paid after the company incurs the expenses
general objective of financial reporting - Answers to provide useful and understandable
information for external users decision making
specific objective of financial reporting - Answers to provide information about
- economic resources, obligations and equality
- financial performance and earnings during a specified period
- cash flows
Qualitative characteristics of accounting information - Answers 1. Accounting information
- benefits > costs
2. Understandability
3. Decision Usefulness
- Relevance
- Comparability
- Representational faithfulness
relevance - Answers the most important characteristic.
- predictive value, confirmatory value, materiality
comparability - Answers verifiability, timeliness, and understandability
representational faithfulness - Answers completeness, free of errors, and neutrality
10 basic financial elements - Answers assets, liabilities, owners equity, investments by owners,
distributions to owners, comprehensive income, revenues, expenses, gains, losses
recognition - Answers to be recorded or not?
to be recognized: needs to be a measurable element with relevancy and reliability
measurement - Answers at how much?
reporting - Answers how to present? in which financial statements?
accrual accounting - Answers when you earn revenue no matter when you receive it
cash-basis accounting - Answers revenue you only receive in cash
, revenue recognition principle - Answers revenues should be recognized when transactions that
cause them occur and when revenues are earned, not necessarily when cash is received
Revenue recognition - scenario 1 - Answers cash is received the same date when the revenue is
earned
Dr. Cash
Cr. revenue/sales
- increase on same date no adj. entry
Revenue recognition - scenario 2 - Answers cash is received after the delivery of merchandise or
services
Dr. A/R
Cr. Revenue (accrued revenue)
adj. entry
Dr. Cash
Cr. A/R
Revenue recognition - scenario 3 - Answers cash is received before the company delivers goods
or services
Dr. Cash
Cr. unearned revenue
adj. entry
Dr. Unearned revenue
Cr. Revenue
matching principle - Answers resources consumed to earn revenues in an accounting period
should be recorded in that period as expenses, regardless of when cash is paid
Matching principle - scenario 1 - Answers cash is paid on the same data as the expense is
incurred
Dr. Expense
Cr. Cash
Matching principle - Scenario 2 - Answers cash is paid after the company incurs the expenses
