A100 IU Exam 2 Latest Test Questions
with Actual Detailed Answers 2025-
2026 Updated.
Business activities - Answer Operating, Investing, and Financing
Sources of funds - Answer liabilities and stockholders’ equity
Uses of funds - Answer assets
Equity Investors - Answer Owners/shareholders
Care about earnings retained from profitable business operations
Legal rights of stockholders - Answer Ownership, hope for profit
Benefits of stockholders - Answer Increased value of shares, possible dividends
Risks of stockholders - Answer May not receive ROI, can lose some or all investment, may not
receive dividend
Debt Investors - Answer Creditors (banks, leasing, bond holders)
reported as liability
principle and interest must be paid
Legal rights of debt investors - Answer Interest and principle must be paid
able to demand payment , confiscate items, or "call the note"
Benefits of Debt investors - Answer Earn a return greater than that of the borrowed funds, net
benefits retained by the owners
Risks of debt investors - Answer Financial risks
, Examples of External users - Answer Owners, creditors, potential investors, general public,
customers, and more
What is accural accounting? - Answer Revenue is recognized when goods are delivered
(earned).
Accounts payable - Answer Liability, Recieved goods but not payed yet
Accounts recieveable - Answer Asset, provided a service but not payed yet
Prepaid expenses - Answer Asset, Paid cash but not revieved goods or service
Unearned Revenue - Answer Liability, Paid cash but done nothing to earn it
Arrticulation - Answer Relationship between financial statements
Matching principle - Answer Recording revenues in the same period with the expenses
Auditing - Answer An assurance service/independent professional service that improves
information for decision makers
Management responsibilities - Answer Implements internal controls, prepares financial
statements
Auditor - Answer Issues audit report to accompany financial statements
Audit risk - Answer Risk that auditors issue a "clean" opinion when there actually are material
misstatements, can never be zero
Audit opinion - Answer Based on risk based testing issue report as to the fairness of the
financial statements.
2 types of fraud - Answer Misappropriation (stealing) and Fraudulent Financial Reporting
with Actual Detailed Answers 2025-
2026 Updated.
Business activities - Answer Operating, Investing, and Financing
Sources of funds - Answer liabilities and stockholders’ equity
Uses of funds - Answer assets
Equity Investors - Answer Owners/shareholders
Care about earnings retained from profitable business operations
Legal rights of stockholders - Answer Ownership, hope for profit
Benefits of stockholders - Answer Increased value of shares, possible dividends
Risks of stockholders - Answer May not receive ROI, can lose some or all investment, may not
receive dividend
Debt Investors - Answer Creditors (banks, leasing, bond holders)
reported as liability
principle and interest must be paid
Legal rights of debt investors - Answer Interest and principle must be paid
able to demand payment , confiscate items, or "call the note"
Benefits of Debt investors - Answer Earn a return greater than that of the borrowed funds, net
benefits retained by the owners
Risks of debt investors - Answer Financial risks
, Examples of External users - Answer Owners, creditors, potential investors, general public,
customers, and more
What is accural accounting? - Answer Revenue is recognized when goods are delivered
(earned).
Accounts payable - Answer Liability, Recieved goods but not payed yet
Accounts recieveable - Answer Asset, provided a service but not payed yet
Prepaid expenses - Answer Asset, Paid cash but not revieved goods or service
Unearned Revenue - Answer Liability, Paid cash but done nothing to earn it
Arrticulation - Answer Relationship between financial statements
Matching principle - Answer Recording revenues in the same period with the expenses
Auditing - Answer An assurance service/independent professional service that improves
information for decision makers
Management responsibilities - Answer Implements internal controls, prepares financial
statements
Auditor - Answer Issues audit report to accompany financial statements
Audit risk - Answer Risk that auditors issue a "clean" opinion when there actually are material
misstatements, can never be zero
Audit opinion - Answer Based on risk based testing issue report as to the fairness of the
financial statements.
2 types of fraud - Answer Misappropriation (stealing) and Fraudulent Financial Reporting
