BA220 Financial Accounting Midterm Answers

BA220 Financial Accounting Midterm Answers

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1. What is the accounting equation?

2.  Do you use debit or credit to increase an asset?

3.  Do you use debit or credit to increase an account under Liabilities?

4.  Do you use debit or credit to decrease an account under Owner’s/Stockholder’s Equity?

5.  Fill in the missing number in place of the question mark:

6.  What component within the accounting equation would “Cash” fall under?

7.  What component within the accounting equation would “Accounts Payable” fall under?

8. How would you increase a business’s “Land” account, debit or credit?

9.  What component within the accounting equation would “Service Revenue” fall under?

10.  Do you use debit or credit to decrease an “Asset” account?

11.  These are main types of accounting in which businesses incorporate.  One of these is Cash Base Accounting.  What is the other one?

12.  Fill in the blank for the following statement.  Under Cash Base Accounting, you record the transactions as _____ flows in and out of the business.

13. Fill in the blank for the following statement.  Accrual Base Accounting is when the accountant records the transactions are the services and expenses are _________.

14.  Which accounting method (Case Base vs. Accrual Base) gives a more accurate picture of the financial health of a company?

15.  If a company does not specify (especially in your homework) whether they practice Accrual Base Accounting vs. Cash Base Accounting, which one would you automatically assume is being utilized by the accounting team?

16.  The financial records of the owner and the business should NEVER be combined.  This is referred to as the, “__________________”. 

17.  List the four Financial Statements in the order they would be created which a for-profit business would produce after each accounting period:

18. Which Financial Statement calculates Net Income/Profit for a business?

19. Which Financial Statement shows the “The Accounting Equation” and how it balances?

20.  Which Financial Statement shows the changes in the dollar amount of Ownership within the business?

21.  An expense account is under what section of The Accounting Equation?

22. How do you increase an expense account, debit or credit?

23. How do you increase all other Owner’s/Stockholder’s Equity Account, other than expense and owner withdrawal amounts?

24. For accounts under the Owner’s/Stockholder’s Equity account which are increased with a debit, what

25.  Under what part of The Accounting Equation are Prepaid Expenses listed under?

26. Under what section The Accounting Equation are Revenue accounts listed under?

27. How are Revenue accounts increased, debit or credit?

28. Input in the missing numbers within this journal entry (labeled with a “?”)

29. Where is the unearned revenue account listed under The Accounting Equation?

30.  In the general journal when entering in the debits and credits, which entry is usually on top, credit or debit?

31.  What are the three inventory accounting methods discussed within the lecture?

32.  Which inventory accounting method is no longer accepted by General Accepted Accounting Principles (GAAP)?

33.  What dictates the reason why an accountant would choose one of the three inventory accounting methods (FIFO, LIFO, or Weighted Average)?

34.  What is the principle called for when you match the expenses incurred with the revenue made, in which satisfies the purpose for which the expense was incurred?

35.  Which inventory method accounts for the most recent inventory purchased first within its calculation?

36.  Which inventory method accounts for the least recent inventory purchased first within its calculation?

37. Which inventory method accounts for neither least recent or most recent inventory purchased first within its calculation?

38.  From the accounting equation, which part of the equation represents what you owe?

39.  From the accounting equation, which part of the equation represents what you own?

40.  From the accounting equation, which part of the equation represents what you have?