Financial Accounting Tutorial Exam72

Question 1: The Accounting Equation and Transaction Analysis

Define the accounting equation and explain how it is used to record business transactions. Provide an example of a transaction and show how it would be recorded using the accounting equation.

Question 2: The Balance Sheet

Describe the purpose and structure of a balance sheet. List the current asset, non-current asset, current liability, non-current liability, and equity accounts typically found on a balance sheet.

Question 3: The Income Statement

Explain the difference between revenue and expenses. How are these accounts used to determine net income on an income statement? Provide an example of how a transaction would be recorded on an income statement.

Question 4: The Statement of Cash Flows

Describe the three main sections of a statement of cash flows. How is each section prepared, and what information does it provide about a company's cash flow activities?

Question 5: Adjusting Entries

Define adjusting entries and explain why they are necessary. Provide an example of an adjusting entry that would be made at the end of an accounting period.

Question 6: Closing Entries

Explain the purpose of closing entries and the steps involved in closing the books at the end of an accounting period.

Question 7: Financial Ratios

Describe the three main categories of financial ratios: liquidity, solvency, and profitability. Calculate the current ratio, debt-to-equity ratio, and return on equity for a given company using its financial statements.

Question 8: Cash Flow Analysis

Explain how cash flow analysis can provide insights into a company's financial health. Describe the key indicators that analysts look for when evaluating a company's cash flow.

Question 9: Accrual Accounting vs. Cash Basis Accounting

Compare and contrast accrual accounting and cash basis accounting. Explain the advantages and disadvantages of each approach.

Question 10: Accounting Standards

Discuss the role of accounting standards in ensuring the accuracy and consistency of financial reporting. Explain the importance of following established accounting standards when preparing financial statements.

2025-02-20

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