PACE Exam Review With 100% Correct And Verified Answers, Exams of Advanced Education

Download PACE Exam Review With 100% Correct And Verified Answers and more Exams Advanced Education in PDF only on Docsity!

PACE Exam Review With 100% Correct

And Verified Answers

Financial Accounting - Correct Answer-used in preparing general purpose financial statements such as income statements, retained earnings statements, balance sheets, and statement of cash flows Income Statement - Correct Answer-reports a firms profitability for a period of time as measured by the excess of revenues over expenses Revenues - Correct Answer-increases in net assets resulting from sales of goods or services Expenses - Correct Answer-costs incurred to generate the revenues Retained Earnings Statement - Correct Answer-reconciles the beginning balance of RE for the period to the ending balance of RE for the period Net Income ___ RE - Correct Answer-increases Net Loss ___ RE - Correct Answer-decreases Dividends ___ RE - Correct Answer-decrease Balance Sheet - Correct Answer-reports a firms assets, liabilities, and stockholders equity at a point in time Assets - Correct Answer-measurable resources of a firm Liabilities - Correct Answer-obligations owed by a firm to third parties Stockholders Equity - Correct Answer-the owners interest in the firm Stockholders Equity is Comprised of ___ and ___ - Correct Answer-contributed capital earnings retained in the firm Statement of Cash Flows - Correct Answer-Provides a detailed analysis of the changes in cash during the year Transaction - Correct Answer-an observable and measurable exchange between two parties Accounting Cycle - Correct Answer-a methodical way of recording and summarizing a firms transactions and events for a period of time

Steps in the accounting cycle - Correct Answer-1) record transactions in a journal

2. post from the journal to the ledger
3. prepare trial balance
4. from trial balance prepare financial statements
5. journalize and post adjusting journal entries
6. journalize and post closing entries
7. prepare post closing trial balance Journal - Correct Answer-a chronological record of transactions Normal Balance: Asset - Correct Answer-debit Normal Balance: Liability - Correct Answer-credit Normal Balance: Stockholders Equity - Correct Answer-credit Normal Balance: Revenues - Correct Answer-credit Normal Balance: Expenses - Correct Answer-debit Sales Transactions - Correct Answer-revenue is recognized at the point of sale Trade Discount - Correct Answer-a deduction from the list price to arrive at gross selling price NOT RECORDED in the accounts Sales Discount - Correct Answer-when goods are sold on account and sellers may offer a cash discount to induce early payment Sales Returns - Correct Answer-merchandise returned by the buyer and considered a cancellation of the sale Sales Allowance - Correct Answer-a deduction from the original invoice price granted to the customer for a variety of reasons Cost of Goods Sold - Correct Answer-the cost or expense of inventory sold during the period Cash Basis Accounting - Correct Answer-revenue is recognized when cash is received and expenses are recognized when cash is paid out Accrual Basis Accounting - Correct Answer-revenue is recognized when earned, not necessarily when cash is received and expenses are recognized when incurred, not necessarily when cash is paid out

Deferrals - Correct Answer-expenses that have been paid but not yet incurred, revenues that have been received but not yet earned Accruals - Correct Answer-expenses that have been incurred but not yet paid, revenues that have been earned but not yet received