ACC 101 Financial Accounting Study
Guide:Income Statement & Key
Accounting Concepts,2026 Updated.
“bookkeeping - CORRECT ANSWER -day to day keeping of transactions"
"steps of decision making - CORRECT ANSWER -
● identify issue
● gather information
● identify alternatives
● select option that most likely results in desired objective"
"accounting - CORRECT ANSWER -analysis of events
record and report financial effects of business activities"
"where does capital come from (3) - CORRECT ANSWER -
● investors
● creditors(lenders)
● business itself (from earnings retained)"
"2 main types of accounting - CORRECT ANSWER -financial and managerial"
"managerial accounting - CORRECT ANSWER -gather and analysis of information
for internal use and decision making."
"financial accounting - CORRECT ANSWER -gather, report, analysis of information
for external users- investors and creditors. summary of a business"
"what does managerial accounting review - CORRECT ANSWER -product cost,
breakeven analysis, budgeting, performance analysis, outsource production"
"what does financial accounting review - CORRECT ANSWER -credit analysis,
financial health, estimate value of the company"
"examples of external financial reports for financial accounting - CORRECT
ANSWER -annual report, financial statement, balance sheet, income statement,
statement of cash flow"
"balance sheet - CORRECT ANSWER -reports assets and liabilities. basic.
,list as of a point in time. As of today, as of yesterday"
"income statement - CORRECT ANSWER -how much did you ,ake
period of time - from nov to jan"
"statement of cash flow - CORRECT ANSWER -where did the cash come from and
where did the cash go
period of time - from nov to jan"
"lender - CORRECT ANSWER -lends money with intent to get it back plus interest.
need current income, existing obligations, existing assets, payroll stub, tax return,
monthly payments, bank statements"
"investor - CORRECT ANSWER -buys into your company. looks at if the business is
profitable, what they are buying, buying obligations, potential future projections"
"what forms will the manager of a business use - CORRECT ANSWER -both
financial and managerial"
"fasb- what does it stand for, who are they and what do they do - CORRECT
ANSWER -financial accounting standards board
private group, not government agency, no legal authority, conducted by people from
a variety of business related backgrounds.
establishes financial accounting and reporting standards for private sector
companies
1 of the two boards that make up GAAP"
"gasb- what does it stand for, who are they, what do they do - CORRECT ANSWER
-governmental accounting standards board
sets accounting and financial reporting standards for state and legal governments.
authority over financial reporting by government entities
1 of the two boards that make up GAAP"
"gaap - CORRECT ANSWER -generally accepted accounting principles"
"sec - CORRECT ANSWER -Securities and Exchange Commission
regulates the stock exchange. provides investors with full and fair information about
publicly traded companies.
legal punishment"
"iasb - CORRECT ANSWER -International Accounting Standards Board
develop international accounting standards. made up of members from many
countries"
, "aicpa - CORRECT ANSWER -american institute of certified public accountants
administers the cpa exam.
enforces professional sanction by taking away a cpa license when acted unethically."
"role and purpose of accounting - CORRECT ANSWER -accumulate and report on
financial information about performance, financial position, cash flow of a business.
used to reach decisions about how to manage the business, invest in it, or lend
money to it"
"What is a balance sheet - CORRECT ANSWER -statement of what they have and
how they financed it at a specific point in time."
"balance sheet equation - CORRECT ANSWER -assets = liabilities + owners equity"
"what are assets and examples - CORRECT ANSWER -what they own or control
that will provide probable future benefits
cash, accounts receivable, inventory, buildings, land."
"what are liabilities and examples - CORRECT ANSWER -what we owe. obligations
that require future sacrifice.
phone bill, car loan, accts payable, fed and state govt tax, mortgage, unearned
revenue"
"what is owners equity and examples - CORRECT ANSWER -owners share,
stockholders equity, how much owner originally invested in business + how much
profit they have left
capital stock- amt given by shareholders to obtain shares of stock(capital=$ so
money from stocks)
retained earnings- earnings retained in business, ex= net income"
"do dividends increase or decrease owners equity - CORRECT ANSWER
-decrease"
"does investments by owners increase or decrease owners equity - CORRECT
ANSWER -increase"
"what is an income statement - CORRECT ANSWER -analyzes economic
performance for a specific period of time. statement of income. revenues, expenses,
liabilities."
"equation for net income - CORRECT ANSWER -net income= revenues - expenses"
"does revenues increase or decrease net assets - CORRECT ANSWER -increase"
Guide:Income Statement & Key
Accounting Concepts,2026 Updated.
“bookkeeping - CORRECT ANSWER -day to day keeping of transactions"
"steps of decision making - CORRECT ANSWER -
● identify issue
● gather information
● identify alternatives
● select option that most likely results in desired objective"
"accounting - CORRECT ANSWER -analysis of events
record and report financial effects of business activities"
"where does capital come from (3) - CORRECT ANSWER -
● investors
● creditors(lenders)
● business itself (from earnings retained)"
"2 main types of accounting - CORRECT ANSWER -financial and managerial"
"managerial accounting - CORRECT ANSWER -gather and analysis of information
for internal use and decision making."
"financial accounting - CORRECT ANSWER -gather, report, analysis of information
for external users- investors and creditors. summary of a business"
"what does managerial accounting review - CORRECT ANSWER -product cost,
breakeven analysis, budgeting, performance analysis, outsource production"
"what does financial accounting review - CORRECT ANSWER -credit analysis,
financial health, estimate value of the company"
"examples of external financial reports for financial accounting - CORRECT
ANSWER -annual report, financial statement, balance sheet, income statement,
statement of cash flow"
"balance sheet - CORRECT ANSWER -reports assets and liabilities. basic.
,list as of a point in time. As of today, as of yesterday"
"income statement - CORRECT ANSWER -how much did you ,ake
period of time - from nov to jan"
"statement of cash flow - CORRECT ANSWER -where did the cash come from and
where did the cash go
period of time - from nov to jan"
"lender - CORRECT ANSWER -lends money with intent to get it back plus interest.
need current income, existing obligations, existing assets, payroll stub, tax return,
monthly payments, bank statements"
"investor - CORRECT ANSWER -buys into your company. looks at if the business is
profitable, what they are buying, buying obligations, potential future projections"
"what forms will the manager of a business use - CORRECT ANSWER -both
financial and managerial"
"fasb- what does it stand for, who are they and what do they do - CORRECT
ANSWER -financial accounting standards board
private group, not government agency, no legal authority, conducted by people from
a variety of business related backgrounds.
establishes financial accounting and reporting standards for private sector
companies
1 of the two boards that make up GAAP"
"gasb- what does it stand for, who are they, what do they do - CORRECT ANSWER
-governmental accounting standards board
sets accounting and financial reporting standards for state and legal governments.
authority over financial reporting by government entities
1 of the two boards that make up GAAP"
"gaap - CORRECT ANSWER -generally accepted accounting principles"
"sec - CORRECT ANSWER -Securities and Exchange Commission
regulates the stock exchange. provides investors with full and fair information about
publicly traded companies.
legal punishment"
"iasb - CORRECT ANSWER -International Accounting Standards Board
develop international accounting standards. made up of members from many
countries"
, "aicpa - CORRECT ANSWER -american institute of certified public accountants
administers the cpa exam.
enforces professional sanction by taking away a cpa license when acted unethically."
"role and purpose of accounting - CORRECT ANSWER -accumulate and report on
financial information about performance, financial position, cash flow of a business.
used to reach decisions about how to manage the business, invest in it, or lend
money to it"
"What is a balance sheet - CORRECT ANSWER -statement of what they have and
how they financed it at a specific point in time."
"balance sheet equation - CORRECT ANSWER -assets = liabilities + owners equity"
"what are assets and examples - CORRECT ANSWER -what they own or control
that will provide probable future benefits
cash, accounts receivable, inventory, buildings, land."
"what are liabilities and examples - CORRECT ANSWER -what we owe. obligations
that require future sacrifice.
phone bill, car loan, accts payable, fed and state govt tax, mortgage, unearned
revenue"
"what is owners equity and examples - CORRECT ANSWER -owners share,
stockholders equity, how much owner originally invested in business + how much
profit they have left
capital stock- amt given by shareholders to obtain shares of stock(capital=$ so
money from stocks)
retained earnings- earnings retained in business, ex= net income"
"do dividends increase or decrease owners equity - CORRECT ANSWER
-decrease"
"does investments by owners increase or decrease owners equity - CORRECT
ANSWER -increase"
"what is an income statement - CORRECT ANSWER -analyzes economic
performance for a specific period of time. statement of income. revenues, expenses,
liabilities."
"equation for net income - CORRECT ANSWER -net income= revenues - expenses"
"does revenues increase or decrease net assets - CORRECT ANSWER -increase"
