Exam 1 - AGEC 325 TAMU Exam
Questions and Answers Graded A+
Cash - Basis Accounting & its strengths & weaknesses - Correct answer-system of
accounting in which revenue is reported when cash is received and expenses are
recorded when paid.
Strength- easy to use & comprehend
Weakness- not accurate in profit reporting.
Accrual Accounting & its strength & weakness - Correct answer-system of
accounting in which revenue is reported when earned and expenses reported when
incurred, not necessarily when paid.
Strength- accurate in profit reporting
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, Weakness- harder to understand how to use
Accounting period - Correct answer-period used to summarize revenue & expenses
& estimate a profit.
Difference between calendar year & fiscal year? - Correct answer-Calendar year =
Jan 1- Dec 31.
Fiscal = whatever business wants
Revenue - Correct answer-value of products & services sold by a business during
an accounting period- can be cash or non cash
profit - Correct answer-revenue - expenses & opportunity costs
can also be net farm income - opportunity costs
Prepaid expense - Correct answer-payment made for a product or service in an
accounting period before the one in which it will be used to produce revenue
owner equity - Correct answer-difference between business assets and business
liabilities
*represents the net value of the business to the owner's of the business
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Questions and Answers Graded A+
Cash - Basis Accounting & its strengths & weaknesses - Correct answer-system of
accounting in which revenue is reported when cash is received and expenses are
recorded when paid.
Strength- easy to use & comprehend
Weakness- not accurate in profit reporting.
Accrual Accounting & its strength & weakness - Correct answer-system of
accounting in which revenue is reported when earned and expenses reported when
incurred, not necessarily when paid.
Strength- accurate in profit reporting
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Weakness- harder to understand how to use
Accounting period - Correct answer-period used to summarize revenue & expenses
& estimate a profit.
Difference between calendar year & fiscal year? - Correct answer-Calendar year =
Jan 1- Dec 31.
Fiscal = whatever business wants
Revenue - Correct answer-value of products & services sold by a business during
an accounting period- can be cash or non cash
profit - Correct answer-revenue - expenses & opportunity costs
can also be net farm income - opportunity costs
Prepaid expense - Correct answer-payment made for a product or service in an
accounting period before the one in which it will be used to produce revenue
owner equity - Correct answer-difference between business assets and business
liabilities
*represents the net value of the business to the owner's of the business
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
