Financial Accounting Exam 1 Study Resource

Which of the following is an internal user of accounting information?

• Managers

• Shareholders

• Creditors

• IRS

Which equation is always true in accounting?

• Assets = Liabilities + Stockholders’ Equity

• Assets = Equity – Liabilities

• Assets = Revenue – Expenses

• Assets = Cash + Supplies

Which assumption states that business activities are separate from owners?

• Business Entity

• Going Concern

• Time Period

• Monetary Unit

Which financial statement shows company profitability over a period?

• Income Statement

• Balance Sheet

• Statement of Cash Flows

• Retained Earnings

Retained Earnings are calculated as:

• Beginning RE + Net Income – Dividends

• Beginning RE + Assets – Liabilities

• Net Income – Expenses

• Total Assets – Total Liabilities

Which is NOT a business organization form?

• Nonprofit

• Partnership

• Corporation

• Sole Proprietorship

Under accrual accounting, revenues are recorded when:

• They are earned

• Cash is received

• Bills are paid

• Expenses occur

The accumulated depreciation account is classified as a:

• Contra Asset

• Liability

• Expense

• Equity

The debt ratio formula is:

• Total Liabilities ÷ Total Assets

• Total Assets ÷ Total Liabilities

• Total Assets – Total Liabilities

• Total Liabilities – Total Assets

Which accounts are closed at the end of the period?

• Revenues, Expenses, Dividends

• Assets & Liabilities

• Equity & Liabilities

• Assets & Equity