Financial Accounting
FINAL EXAM STUDY GUIDE
The final exam consists of 100 multiple-choice questions from the information presented in Chapter 1 through Chapter 13. Each question is worth 2.5 points. This study guide indicates the items you should review before taking the exam. GOOD LUCK!
CHAPTER 1
1. Know the 3 forms of business entities
2. Know the definitions of revenues and expenses
3. Know the difference between internal and external users
4. FASB – responsible for GAAP (accounting principles)
5. Accounting Equation
6. Know the 3 activities that business engage in and give examples of each activity. (These 4 questions also relate to Chapter 12, The Statement of Cash Flows)
7. The International Accounting Standards Board is responsible for developing a single set of worldwide accountings standards (IFRS).
8. These standards will help companies to reduce accounting costs, make it easier to acquire foreign companies, and facilitate comparisons between foreign companies.
9. Know the primary objective of financial reporting
10. What makes information relevant?
11. Financial information should be understandable to whom
12. Balance Sheet – lists assets, liabilities and owners’ equity
13. Income Statement – revenues minus expenses equal net income
14. Net Income = Revenues - Expenses
15. Assets are recorded at historical/original cost because it is objective and verifiable
CHAPTER 2
1. Review various source documents. Source documents indicate a transaction has occurred. Ex: Invoice, check, time card, shipping/receiving documents.
2. How do transactions affect the Accounting Equation? For example, know the effects for the following transactions: owner invests in business; purchase supplies for cash; purchase supplies on account; earn a revenue and receive cash; earn a revenue and receive a promise of cash at a later date.
3. Left side = Debit; Right side = Credit
4. Initial recording of transaction is
The final exam consists of 100 multiple-choice questions from the information presented in Chapter 1 through Chapter 13. Each question is worth 2.5 points. This study guide indicates the items you should review before taking the exam. GOOD LUCK!
CHAPTER 1
1. Know the 3 forms of business entities
2. Know the definitions of revenues and expenses
3. Know the difference between internal and external users
4. FASB – responsible for GAAP (accounting principles)
5. Accounting Equation
6. Know the 3 activities that business engage in and give examples of each activity. (These 4 questions also relate to Chapter 12, The Statement of Cash Flows)
7. The International Accounting Standards Board is responsible for developing a single set of worldwide accountings standards (IFRS).
8. These standards will help companies to reduce accounting costs, make it easier to acquire foreign companies, and facilitate comparisons between foreign companies.
9. Know the primary objective of financial reporting
10. What makes information relevant?
11. Financial information should be understandable to whom
12. Balance Sheet – lists assets, liabilities and owners’ equity
13. Income Statement – revenues minus expenses equal net income
14. Net Income = Revenues - Expenses
15. Assets are recorded at historical/original cost because it is objective and verifiable
CHAPTER 2
1. Review various source documents. Source documents indicate a transaction has occurred. Ex: Invoice, check, time card, shipping/receiving documents.
2. How do transactions affect the Accounting Equation? For example, know the effects for the following transactions: owner invests in business; purchase supplies for cash; purchase supplies on account; earn a revenue and receive cash; earn a revenue and receive a promise of cash at a later date.
3. Left side = Debit; Right side = Credit
4. Initial recording of transaction is