FINANCIAL ACCOUNTING PRINCIPLES
INITIAL ASSESSMENT 2026 EXTENSIVE
QUESTIONS WITH ACCURATE SOLUTIONS
GRADED A+
⩥ Liabilities. Answer: Amount that company owes
⩥ Equity. Answer: Amount invested in company by owners; owners
claim no assets
⩥ Accounting equation. Answer: Assets = liabilities + equity
⩥ Truism in business. Answer: Company never receives greater than it
gives & never gives greater than it receives
⩥ 4 Rules of debits & credits. Answer: 1. Debit amount received; credit
amount given up
2. Debuts on left; credits on the right
3. In each transactions; list debits first (good) & credits last (bad)
4. Total debits = total credits
, ⩥ Making an ethical decision. Answer: 1. Identify ethical concerns- use
personal ethics to recognize concern
2. Analyze options- consider all good & bad consequences
3. Make ethical decision- choose best option given circumstances
⩥ Fraud. Answer: Intentional manipulation- focus on prevention. Once
fraud is committed, loses are rarely retrieved.
⩥ Fraud Triangle. Answer: Opportunity (low risk of being caught),
Financial Pressure (incentive), Rationalization (making situation
justifiable)
⩥ GAAP (generally accepted accounting principles). Answer: Financial
accounting is governed by concepts & rules.
1. Relevant info affects decision of user
2. Reliable info trusted by users
3. Comparable info aids in contrasting organizations
⩥ SEC- Securities and Exchange Commission. Answer: Federal agency
congress has charged to set reporting rules for org that sell ownership
shares to public
⩥ FASB (Financial Accounting Standards Board). Answer: Independent
group of full-time members responsible for setting accounting rules
INITIAL ASSESSMENT 2026 EXTENSIVE
QUESTIONS WITH ACCURATE SOLUTIONS
GRADED A+
⩥ Liabilities. Answer: Amount that company owes
⩥ Equity. Answer: Amount invested in company by owners; owners
claim no assets
⩥ Accounting equation. Answer: Assets = liabilities + equity
⩥ Truism in business. Answer: Company never receives greater than it
gives & never gives greater than it receives
⩥ 4 Rules of debits & credits. Answer: 1. Debit amount received; credit
amount given up
2. Debuts on left; credits on the right
3. In each transactions; list debits first (good) & credits last (bad)
4. Total debits = total credits
, ⩥ Making an ethical decision. Answer: 1. Identify ethical concerns- use
personal ethics to recognize concern
2. Analyze options- consider all good & bad consequences
3. Make ethical decision- choose best option given circumstances
⩥ Fraud. Answer: Intentional manipulation- focus on prevention. Once
fraud is committed, loses are rarely retrieved.
⩥ Fraud Triangle. Answer: Opportunity (low risk of being caught),
Financial Pressure (incentive), Rationalization (making situation
justifiable)
⩥ GAAP (generally accepted accounting principles). Answer: Financial
accounting is governed by concepts & rules.
1. Relevant info affects decision of user
2. Reliable info trusted by users
3. Comparable info aids in contrasting organizations
⩥ SEC- Securities and Exchange Commission. Answer: Federal agency
congress has charged to set reporting rules for org that sell ownership
shares to public
⩥ FASB (Financial Accounting Standards Board). Answer: Independent
group of full-time members responsible for setting accounting rules
