Final Exam Review (Accounting Fall 2024)

______________ is the process of recording, maintaining, and reporting an organization’s financial transactions and records.

• Bookkeeping

• Finance

• Accounting

The ____________ are a commonly-followed set of accounting rules, standards, and procedures for reporting financial information to external users.

• Generally Accepted Accounting Principles (GAAP)

• Securities and Exchange Commission (SEC)

• Sarbanes Oxley Act (SOX)

The ____________ means revenues and expenses are recognized and recorded when cash actually changes hands.

• Cash accounting method

• Manual accounting method

• Accrual accounting method

The ____________ means revenues and expenses are recognized and recorded at the time they are earned or incurred, even if money doesn’t change hands.

• Cash accounting method

• Manual accounting method

• Accrual accounting method

When using the accrual basis of accounting, revenues must be recognized (recorded) in the period when they are earned. If accounting on a cash basis, revenues are to be recognized when cash is received. Which of the following accounting principles is applied?

• Revenue recognition principle

• Cost principle

• Matching principle

In any business, the _______ of a company always have the first financial claim on the assets of a company.

• Creditors
• Owners
• Investors

Which equation below is the accounting equation?

• Assets = Liabilities - Owners’ Equity

• Assets = Owners’ Equity/Liabilities

• Assets = Liabilities + Owners’ Equity

Owners’ Equity is a(n):

• Creditor’s claim to assets. It is an obligation the company owes.

• Owner’s claim on company assets after all liabilities have been paid.

• Cash collected and controlled by a company.

A _______ is a financial statement that marks a company’s financial situation at a moment in time, showing all assets, liabilities and owner’s equity.

• Income Statement
• Statement of Cash Flows
• Balance Sheet

No matter the mix of liabilities and owner’s equity, the sum of liabilities and owner’s equity will ALWAYS be equal to the ____________ a company owns.

• Total Assets
• Total Revenue
• Total Liabilities