ACCOUNTING 203 FINAL EXAM QUESTIONS AND ANSWERS
Balance Sheet - CORRECT ANSWER✅✅Assets = Liabilities + Owners' Equity
Income Statement - CORRECT ANSWER✅✅Revenue - Expenses = Net Income
basic accounting equation - CORRECT ANSWER✅✅A = L + SE
separate entity assumption - CORRECT ANSWER✅✅the financial reports of a business are assumed to
include the results of only that business's activities
asset - CORRECT ANSWER✅✅an economic resource presently controlled by the company
liabilities - CORRECT ANSWER✅✅measurable amounts that the company owes to creditors
stockholder's equity - CORRECT ANSWER✅✅represents the owners' claims on the business:
1. Owners have claim on amounts they contributed directly to the company in exchange for its stock
(common stock)
2. Owners have a claim on amounts the company has earned through profitable business operations
(retained earnings).
common stock - CORRECT ANSWER✅✅equity paid in by stockholders
retained earnings - CORRECT ANSWER✅✅equity earned by the company
dividends - CORRECT ANSWER✅✅a company's profits are accumulated in Retained Earnings until a
decision is made to distribute them to stockholders in what is called a dividend. Dividend is paid in cash.
Dividends are not an expense incurred to generate earnings
Income Statement Sample (pg.11) - CORRECT ANSWER✅✅Revenues
Sales Revenue
, Total Revenues
Expenses
Salaries and Wages Expense
Income Tax Expense
Total Expenses
Net Income
Statement of Retained Earnings - CORRECT ANSWER✅✅reports the way that net income and the
distribution of dividends affected the financial position of the company during the period
Statement of Retained Earnings Sample (pg.12) - CORRECT ANSWER✅✅Retained Earnings $0
Add: Net Income 2,000
Subtract: Dividends (1,000)
-----------
Retained Earnings $1,000
Balance Sheet - CORRECT ANSWER✅✅reports the amount of assets, liabilities, and stockholder's equity
of a business at a point in time.
Balance Sheet Example (pg.13) - CORRECT ANSWER✅✅Assets
Cash
A/R Accounts Receivable
Supplies
Equipment
Software
Total Assets
Liabilities and Stockholders' Equity
Liabilities
Balance Sheet - CORRECT ANSWER✅✅Assets = Liabilities + Owners' Equity
Income Statement - CORRECT ANSWER✅✅Revenue - Expenses = Net Income
basic accounting equation - CORRECT ANSWER✅✅A = L + SE
separate entity assumption - CORRECT ANSWER✅✅the financial reports of a business are assumed to
include the results of only that business's activities
asset - CORRECT ANSWER✅✅an economic resource presently controlled by the company
liabilities - CORRECT ANSWER✅✅measurable amounts that the company owes to creditors
stockholder's equity - CORRECT ANSWER✅✅represents the owners' claims on the business:
1. Owners have claim on amounts they contributed directly to the company in exchange for its stock
(common stock)
2. Owners have a claim on amounts the company has earned through profitable business operations
(retained earnings).
common stock - CORRECT ANSWER✅✅equity paid in by stockholders
retained earnings - CORRECT ANSWER✅✅equity earned by the company
dividends - CORRECT ANSWER✅✅a company's profits are accumulated in Retained Earnings until a
decision is made to distribute them to stockholders in what is called a dividend. Dividend is paid in cash.
Dividends are not an expense incurred to generate earnings
Income Statement Sample (pg.11) - CORRECT ANSWER✅✅Revenues
Sales Revenue
, Total Revenues
Expenses
Salaries and Wages Expense
Income Tax Expense
Total Expenses
Net Income
Statement of Retained Earnings - CORRECT ANSWER✅✅reports the way that net income and the
distribution of dividends affected the financial position of the company during the period
Statement of Retained Earnings Sample (pg.12) - CORRECT ANSWER✅✅Retained Earnings $0
Add: Net Income 2,000
Subtract: Dividends (1,000)
-----------
Retained Earnings $1,000
Balance Sheet - CORRECT ANSWER✅✅reports the amount of assets, liabilities, and stockholder's equity
of a business at a point in time.
Balance Sheet Example (pg.13) - CORRECT ANSWER✅✅Assets
Cash
A/R Accounts Receivable
Supplies
Equipment
Software
Total Assets
Liabilities and Stockholders' Equity
Liabilities
