ACCT_301_Week_8_Final_Exam.docx Week 8 : Final Exam - Final Exam Page 1 1. (TCO 1) Wha

ACCT_301_Week_8_Final_Exam.docx  Week 8 : Final Exam - Final Exam  Page 1  1. (TCO 1) What is the accounting equation? Suppose your company sold $12,000 in merchandise to a customer for cash. How does this transaction impact the accounting equation? (Points : 17)          Â        Assets =Liabilities   + Capital  +12000=  +12000  It will increase assets & capital by $12000.  2. (TCO 2) What are the four basic financial statements? Describe the balance sheet, & explain why it is important  Anser : The four basic financial statements are; balance sheet, income statement, statement of retained earnings & statements of cash flows. Balance sheet is an important financial document that summarizes various assets, liabilities & equities  held by the company at particular date. Balance sheet is created with a purpose to know the financial position of the enterprise at a particular point of time.  It provides all the information at one place & is important for creditors & investors. It is called Balance sheet because it balance assets with liabilities & equities, Assets = Liabilities + Equity.  Q3What is the Sarbanes-Oxley Act? Do you think this act has more importance for the accounting profession or for investors? Why  Answer : The Sarbanes-Oxley Act was formulated in 2002, to protect the shareholders & the general public from accounting errors & fraudulent practices in the enterprise.  This act was taken care by the Securities & Exchange Commission (SEC).  It is a business practice that deter