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(JHU) BU.210.620 Accounting & Financial Reporting Comprehensive Final Exam Assessment Q & A 2024(JHU) BU.210.620 Accounting & Financial Reporting Comprehensive Final Exam Assessment Q & A 2024(JHU) BU.210.620 Accounting & Financial Reporting Comprehensive Final Exam Assessment Q & A 2024(JHU) BU.210.620 Accounting & Financial Reporting Comprehensive Final Exam Assessment Q & A 2024
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B) Taking out a loan C) Purchasing inventory on credit D) Paying dividends Answer : A) Issuing common stock Rationale: Issuing common stock increases assets (cash) and equity (common stock and additional paid-in capital).
A) Prepaid expenses B) Accounts receivable C) Common stock D) Retained earnings Correct Answer : C) Common stock Rationale: Common stock represents the equity capital contributed by shareholders and is classified as a liability on the balance sheet. Fill-in-the-Blank Question: The accounting equation is expressed as Assets = Liabilities + Equity. Correct Answer : Liabilities Rationale: The accounting equation must always balance, with assets equaling the sum of liabilities and equity. True/False Question: True or False: Revenue recognition occurs when cash is received from a customer. Correct Answer : False Rationale: Revenue recognition is based on when goods or services are delivered, not necessarily when cash is received. Multiple Choice Question:
Which financial statement reports a company's financial position at a specific point in time? A) Income statement B) Statement of cash flows C) Balance sheet D) Statement of retained earnings Correct Answer : C) Balance sheet Rationale: The balance sheet provides a snapshot of a company's assets, liabilities, and equity at a particular date. Fill-in-the-Blank Question: The formula for calculating net income is Revenues - Expenses. Correct Answer : Revenues Rationale: Net income is the difference between total revenues and total expenses incurred by a company. True/False Question: True or False: Depreciation is recorded as an expense on the income statement. Correct Answer : True Rationale: Depreciation represents the allocation of an asset's cost over its useful life and is recognized as an expense on the income statement.
Multiple Choice Question: What is the purpose of the statement of income? A) To show a company's financial position at a specific point in time B) To report the company's cash inflows and outflows C) To present the results of operations over a period D) To summarize the changes in equity during a period Correct Answer : C) To present the results of operations over a period Rationale: The income statement shows a company's revenues, expenses, and net income or loss for a specific period. Fill-in-the-Blank Question: The formula for calculating the debt to equity ratio is Total Liabilities / Total Equity. Correct Answer : Total Equity Rationale: The debt to equity ratio measures the proportion of a company's financing that comes from debt compared to equity. True/False Question: True or False: Retained earnings represent the cumulative net income of a company that has been distributed to shareholders. Correct Answer : False
Rationale: Retained earnings reflect the accumulated profits that have not been distributed to shareholders as dividends. Multiple Choice Question: Which of the following is an example of an operating activity in the statement of cash flows? A) Purchase of land B) Issuance of common stock C) Payment of salaries to employees D) Repayment of a long-term loan Correct Answer : C) Payment of salaries to employees Rationale: Operating activities involve cash flows related to the core business operations of a company. Fill-in-the-Blank Question: The income statement is also known as the Statement of Profit and Loss. Correct Answer : Statement of Profit and Loss Rationale: The income statement summarizes a company's revenues, expenses, and profits or losses over a period. True/False Question:
Question: Which of the following is an example of a contra account? a) Accounts Receivable b) Accumulated Depreciation c) Inventory d) Prepaid Expenses Correct Answer : b) Accumulated Depreciation Rationale: Accumulated Depreciation is a contra account that is used to reduce the carrying amount of a long-lived asset on the balance sheet.
Question: The matching principle requires that expenses be matched with the revenues they help generate. a) True b) False Correct Answer : a) True Rationale: The matching principle states that expenses should be recognized in the same period as the revenues they help to generate, in order to accurately reflect the financial performance of a business.
a) Prepaid Rent b) Accounts Payable c) Salary Payable d) Unearned Revenue Correct Answer : c) Salary Payable Rationale: Accrued expenses are expenses that have been incurred but not yet paid, such as salaries owed to employees.
b) False Correct Answer : a) True Rationale: The cash flow statement summarizes the cash inflows and outflows from different activities to provide insight into a company's liquidity and financial health.
b) Prepaid Rent c) Accounts Payable d) Common Stock Correct Answer : c) Accounts Payable Rationale: Accounts payable is a current liability representing amounts owed by a company to its creditors that are due within one year.
Correct Answer : a) True Rationale: The cash basis of accounting recognizes revenues and expenses when cash is exchanged, regardless of when the revenue was earned or the expense was incurred.