Accounting 1 Final Exam (Module 1)

Accounting Equation

Assets = Liabilities + Stockholders’ Equity (Common Stock + Retained Earnings)

Asset Source

Assets’ increase and so do liabilities + stockholders’ equity

Asset Use

Assets’ decrease and liabilities + stockholders’ equity also decrease

Asset Exchange

Assets increase while liabilities and stockholders' equity remain unchanged.

Claims Exchange

Liabilities + Stockholders equity decrease/increase while assets remained unchanged.

Managerial vs Financials

Financial accounting provides information primarily for investors, creditors, and others outside of a business. While managerial accounting focuses on information for executives, managers, and employees who work inside the business.

Product cost vs Period cost

Product costs are costs that are incurred to create a product, which are capitalized as inventory and expensed when sold, while period costs are incurred during a specific period and are expensed in the period they are incurred, regardless of sales.

Raw Materials

Materials used to make products

Direct Raw Materials

The costs of materials that can be easily and conveniently traced to a specific product or manufacturing process.

Name the big three

Material costs, labor costs, overhead costs.

Why do we have taxes?

Taxes are implemented to generate revenue for government services and infrastructure, redistribute wealth, and regulate behavior.

What are taxes used for?

Taxes are used to fund government services and public goods like education, infrastructure, and healthcare.

Types of taxes

include sin tax, gift tax, estate tax, income tax, sales tax, property tax, and excise tax. These taxes help fund government operations and services.