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Test your basic knowledge |
Business Accounting Basics
Start Test
Study First
Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Profit Margin %
prepare closing entry-post to general ledger
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
Net Income/Sales
Debit Balance - Income Statement - temporary - Expense
2. Income Statement Revenues
(cash - accts revievable - inventory) turn into cash within 12 months
Sales Revenues
Debit Balance - Income Statement - temporary - Expense
Current Assets/Current Liabilities
3. Customer deposits
similar to unearned revenue- liabilities
Credit Balance - Balance Sheet - Permanent - owners equity
companies must reduce the value of land - if the value is lower than its original cost.
the original amount to purchase land is verifiable through the contract documents
4. 2nd step of Accounting Cycle
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
record transactions in general journal
cost-salvage value/years of life
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
5. Current Assets
Sales Revenues
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
cost-salvage value/years of life
(cash - accts revievable - inventory) turn into cash within 12 months
6. Monetary Unit
how we measure - assumes economic mean
Credit balance - Balance sheet and Retained Earnings - Permanent
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
Contra Asset - noncurrent asset
7. Accounts on Income Statement
decrease equity - debit balance
to those willing to take time to understand it
Revenues and Expenses
does the equation remain in balance?
8. Calculating Net Income
Net Income/Sales
Revenues-Expenses
Debit Balance - Income Statement - Temporary - expense
Payment x Rate x Time
9. 4th step of Accounting Cycle
Revenues-Expenses
Debit Balance - Balance sheet - permanent - asset
Credit balance - income statement - temporary - revenues
prepare Unadjusted trial balance
10. Intangibles
Revenues and Expenses
Credit Balance - Balance Sheet - permanent - liability
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
copyright - long term assets - noncurrent
11. Balance Sheet Liabilities
Net Income/Sales
wages payable - utilities payable - interest payable - unearned revenue - note payable
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
Assets - Liabilities - Equity
12. Prepaid insurance
Debit Balance - Retained Earnings - Temporary - Owners Equity
debit balance - balance sheet - permanent - asset
credit balance - balance sheet - permanent - liabilities
credit balance - balance sheet - permanent - liabilities
13. Inventory
Current Assets/Current Liabilities
prepar journal to general ledger
record adjusting entries to general journal
debit balance - Balance sheet - permanent - asset
14. Note Payable
prepare post-closing trial balance
Credit Balance - Balance Sheet - permanent - liability
a company uses the same method each year for calculating inventory
Identify Accounts affected
15. Multistep Income Statement
Debit Balance - Income Statement - temporary - Expense
decrease equity - debit balance
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
prepare Unadjusted trial balance
16. Calculating Cost depreciation
cost-salvage value/years of life
record adjusting entries to general journal
does the equation remain in balance?
post journal to general ledger
17. 10th step of Accounting Cycle
prepare post-closing trial balance
Assets - Liabilities - Equity
Sales Revenues
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
18. Economic Equity
Payment x Rate x Time
post journal to general ledger
Credit balance - income statement - temporary - revenues
each owner has its own books - records - financial statements that are seperate.
19. Balance Sheet Assets
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
prepare financial statements
Net Income/Sales
prepar journal to general ledger
20. NonCurrent Assets
(cash - accts revievable - inventory) turn into cash within 12 months
analyze transactions from external events
Retained earnings beg. balance - Net income - dividends.
(long-term) assets (building - land - equipment)
21. NonCurrent Liabilities
longterm liabilities
to those willing to take time to understand it
(long-term) assets (building - land - equipment)
Current Assets/Current Liabilities
22. Understandability
longterm liabilities
credit balance - income statement - temporary - Revenue
prepare adjusted trial balance
to those willing to take time to understand it
23. Interest Expense
Debit Balance - Income Statement - temporary - Expense
Assets - Liabilities - Equity
cost-salvage value/years of life
Credit balance - Balance sheet and Retained Earnings - Permanent
24. Unearned revenue
Credit Balance - Balance Sheet - permanent - liability
Assets - Liabilities - Equity
credit balance - balance sheet - permanent - liabilities
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
25. 4th step of analyzing transactions
credit balance - income statement - temporary - Revenue
debit balance - income statement - temporary - expense
does the equation remain in balance?
Contra Asset - noncurrent asset
26. Cost of Goods Sold
copyright - long term assets - noncurrent
Credit Balance - Balance Sheet - Permanent - owners equity
Debit Balance - Income Statement - Temporary - expense
how we measure - assumes economic mean
27. Accounts Recievable
Debit Balance - Retained Earnings - Temporary - Owners Equity
Revenues-Expenses
Debit Balance - Balance sheet - permanent - asset
Retained earnings beg. balance - Net income - dividends.
28. Balance sheet Equity
debit balance - income statement - temporary - expense
Contributed Capital - Retained Earnings - Dividends
credit balance - balance sheet - permanent - liabilities
prepare post-closing trial balance
29. 2nd step of analyzing transactions
Debit Balance - Retained Earnings - Temporary - Owners Equity
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
Close out all revenue and expense accounts into retained earnings.
analyze transactions from external events
30. Relevance
Current Assets/Current Liabilities
how we measure - assumes economic mean
credit balance - balance sheet - permanent - liabilities
an appraised value for land gives additional information that is useful to investors
31. Conservatism
copyright - long term assets - noncurrent
companies must reduce the value of land - if the value is lower than its original cost.
Debit Balance - Retained Earnings - Temporary - Owners Equity
does the equation remain in balance?
32. Reliability
credit balance - balance sheet - permanent - liabilities
analyze transactions from external events
debit balance - Balance sheet - permanent - asset
the original amount to purchase land is verifiable through the contract documents
33. Dividends
determine the direction of the effect. debit or credit
each owner has its own books - records - financial statements that are seperate.
Debit Balance - Retained Earnings - Temporary - Owners Equity
similar to unearned revenue- liabilities
34. 3rd step of Accounting Cycle
Revenues-Expenses
Identify Accounts affected
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
prepar journal to general ledger
35. Accts on balance sheet
Sales Revenues
prepare adjusted trial balance
Assets - Liabilities - Equity
record transactions in general journal
36. Accumlated depreciation
Sales Revenues
Contributed Capital - Retained Earnings - Dividends
credit balance - income statement - temporary - Revenue
Contra Asset - noncurrent asset
37. 6th step of Accounting Cycle
post journal to general ledger
Close out all revenue and expense accounts into retained earnings.
Contributed Capital - Retained Earnings - Dividends
the original amount to purchase land is verifiable through the contract documents
38. 9th step of Accounting Cycle
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
debit balance - balance sheet - permanent - asset
copyright - long term assets - noncurrent
prepare closing entry-post to general ledger
39. Materiality
40. 8th step of Accounting Cycle
Debit Balance - Retained Earnings - Temporary - Owners Equity
similar to unearned revenue- liabilities
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
prepare financial statements
41. 1st Step of Analying Transactions
Identify Accounts affected
prepare Unadjusted trial balance
Close out all revenue and expense accounts into retained earnings.
determine the direction of the effect. debit or credit
42. Accumulated depriciation
credit balance - balance sheet - permanent - liabilities
prepare post-closing trial balance
companies must reduce the value of land - if the value is lower than its original cost.
cost-salvage value/years of life
43. Building
Revenues-Expenses
debit balance - Balance sheet - Permanent - asset
analyze transactions from external events
Credit Balance - Balance Sheet - Permanent - owners equity
44. Dividends
(long-term) assets (building - land - equipment)
prepare post-closing trial balance
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
decrease equity - debit balance
45. Closing Entries
prepare adjusted trial balance
Credit balance - Balance sheet and Retained Earnings - Permanent
Close out all revenue and expense accounts into retained earnings.
similar to unearned revenue- liabilities
46. Going Concern
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
Retained earnings beg. balance - Net income - dividends.
credit balance - balance sheet - permanent - liabilities
debit balance - balance sheet - permanent - asset
47. 1st step of Accounting Cycle
Debit Balance - Income Statement - Temporary - expense
Contributed Capital - Retained Earnings - Dividends
each owner has its own books - records - financial statements that are seperate.
analyze transactions from external events
48. Income Satement Expenses
Debit Balance - Balance sheet - permanent - asset
copyright - long term assets - noncurrent
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
debit balance - Balance sheet - permanent - asset
49. 5th step of Accounting Cycle
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
prepar journal to general ledger
record adjusting entries to general journal
debit balance - balance sheet - permanent - asset
50. Retained Earnings
record transactions in general journal
credit balance - balance sheet - permanent - liabilities
Credit balance - Balance sheet and Retained Earnings - Permanent
prepare post-closing trial balance