Acc 340 Exam 1

Question 1

Accounting assumptions

Answer 1

Economic entity
Going concern
Monetary unit
Periodicity

Question 2

Accounting principles

Answer 2

Measurement
Revenue recognition
Expense recognition
Full disclosure

Question 3

Qualitative characteristics

Answer 3

Relevance
Faithful representation
Enhancing

Question 4

Relevance qualities

Answer 4

Predictive value
Confirmatory value
Materiality

Question 5

Faithful representation qualities

Answer 5

Completeness
Neutrality
Free from error

Question 6

Enhancing qualities

Answer 6

Comparability
Verifiability
Timeliness
Understandability

Question 7

Assets

Answer 7

Resources owned that will generate future economic benefits

Question 8

Liabilities

Answer 8

Future sacrifices to settle on obligations from past transactions

Question 9

Equity

Answer 9

Residual claims of owners

Question 10

Investments by owners

Answer 10

Increases in equity due to dividends

Question 11

Distributions to owners

Answer 11

Decreases in equity due to dividends

Question 12

Comprehensive income

Answer 12

All changes in equity other than investments by owners

Question 13

Measurement principle

Answer 13

Reports assets at historical cost or fair value

Question 14

Accruals

Answer 14

Entries where cash is received or paid after the revenue or expense has been earned or incurred

Question 15

Deferrals

Answer 15

Cash is received or paid before revenue has been earned or used up

Question 16

Converting revenue to cash received from customers

Answer 16

Revenues
+- change in accounts receivable
+- change in unearned revenue
= cash received from customers

Question 17

Converting COGS to cash paid to suppliers

Answer 17

COGS
+- change in inventory
+- change in accounts payable
= cash paid to suppliers

Question 18

Multi step income statement:

Income from operations

Answer 18

Net revenue
- COGS
= gross profit
- operating expenses
= income from operations

Question 19

Multistep income statement:

Income from continuing operations

Answer 19

Income from operations
\+- interest, dividend revenue
\+- gain/loss on sale of LT assets
\+- gain/loss on unusual events
= income before taxes
- income tax expense
= income from continuing operations

Question 20

Multi step income statement:

Discontinued operations

Answer 20

Income from continuing operations 
- loss on operations
- impairment loss
- loss on disposal
= net income

Question 21

Retained earnings statement

Answer 21

Beg RE
\+- change in principle net of tax
\+- prior period adjustment 
= Beg RE restated
\+ NEt income
- dividends
= End RE

Question 22

Net realised value

Answer 22

Fair value - disposal cost

Question 23

Impairment loss

Answer 23

Net realised value - book value

Question 24

Stockholders equity accounts

Answer 24

Capital stock
Additional paid in capital
Retained earnings
- treasury stock
Accumulated other comprehensive income
Non controlling interest

Question 25

Cash flows from Operating activities

Answer 25

Net income
\+ depreciation/ amortisation 
\+ loss on sale of PPE
\+ decreases in current assets
\+ increases in current liabilities
- gain on sale of PPE
- decreases in all current liabilities
- increases in all current assets