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Business Accounting Basics

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. Inventory
Payment x Rate x Time
(long-term) assets (building - land - equipment)
debit balance - Balance sheet - permanent - asset
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.

2. 7th step of Accounting Cycle
record adjusting entries to general journal
prepare adjusted trial balance
an appraised value for land gives additional information that is useful to investors
debit balance - Balance sheet - Permanent - asset

3. Cash Principle
Payment x Rate x Time
analyze transactions from external events
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
Debit Balance - Retained Earnings - Temporary - Owners Equity

4. Reliability
similar to unearned revenue- liabilities
the original amount to purchase land is verifiable through the contract documents
(long-term) assets (building - land - equipment)
cost-salvage value/years of life

5. 2nd step of analyzing transactions
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
credit balance - balance sheet - permanent - liabilities
longterm liabilities
credit balance - income statement - temporary - Revenue

6. Prepaid insurance
Net Income/Sales
debit balance - balance sheet - permanent - asset
prepar journal to general ledger
wages payable - utilities payable - interest payable - unearned revenue - note payable

7. Understandability
Payment x Rate x Time
to those willing to take time to understand it
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
a company uses the same method each year for calculating inventory

8. NonCurrent Assets
(long-term) assets (building - land - equipment)
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
credit balance - income statement - temporary - Revenue
debit balance - Balance sheet - permanent - asset

9. Consistency
debit balance - balance sheet - permanent - asset
record transactions in general journal
a company uses the same method each year for calculating inventory
Revenues-Expenses

10. Cost of Goods Sold
Debit Balance - Income Statement - Temporary - expense
each owner has its own books - records - financial statements that are seperate.
longterm liabilities
decrease equity - debit balance

11. Balance Sheet Assets
prepar journal to general ledger
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
Payment x Rate x Time

12. Accumlated depreciation
copyright - long term assets - noncurrent
Credit balance - income statement - temporary - revenues
Contra Asset - noncurrent asset
a company uses the same method each year for calculating inventory

13. 6th step of Accounting Cycle
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
post journal to general ledger
debit balance - balance sheet - permanent - asset
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income

14. Common Stock
Credit Balance - Balance Sheet - Permanent - owners equity
the original amount to purchase land is verifiable through the contract documents
credit balance - income statement - temporary - Revenue
debit balance - Balance sheet - permanent - asset

15. Monetary Unit
how we measure - assumes economic mean
wages payable - utilities payable - interest payable - unearned revenue - note payable
debit balance - balance sheet - permanent - asset
Debit Balance - Income Statement - temporary - Expense

16. NonCurrent Liabilities
longterm liabilities
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
Revenues-Expenses
record transactions in general journal

17. 1st Step of Analying Transactions
Retained earnings beg. balance - Net income - dividends.
Sales Revenues
Current Assets/Current Liabilities
Identify Accounts affected

18. Balance sheet Equity
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
cost-salvage value/years of life
Contributed Capital - Retained Earnings - Dividends
Close out all revenue and expense accounts into retained earnings.

19. Accts on Statement of Retained Earnings
determine the direction of the effect. debit or credit
record adjusting entries to general journal
debit balance - balance sheet - permanent - asset
Retained earnings beg. balance - Net income - dividends.

20. Accumulated depriciation
to those willing to take time to understand it
credit balance - balance sheet - permanent - liabilities
(cash - accts revievable - inventory) turn into cash within 12 months
decrease equity - debit balance

21. Income Statement Revenues
prepare adjusted trial balance
Sales Revenues
an appraised value for land gives additional information that is useful to investors
Identify Accounts affected

22. Balance Sheet Liabilities
Assets - Liabilities - Equity
wages payable - utilities payable - interest payable - unearned revenue - note payable
Contra Asset - noncurrent asset
prepare Unadjusted trial balance

23. Dividends
decrease equity - debit balance
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
(long-term) assets (building - land - equipment)
Assets - Liabilities - Equity

24. Conservatism
companies must reduce the value of land - if the value is lower than its original cost.
Credit Balance - Balance Sheet - Permanent - owners equity
the original amount to purchase land is verifiable through the contract documents
debit balance - balance sheet - permanent - asset

25. Customer deposits
Current Assets/Current Liabilities
similar to unearned revenue- liabilities
prepare adjusted trial balance
debit balance - Balance sheet - Permanent - asset

26. 2nd step of Accounting Cycle
Credit Balance - Balance Sheet - Permanent - owners equity
Sales Revenues
record transactions in general journal
the original amount to purchase land is verifiable through the contract documents

27. Sales revenue
debit balance - Balance sheet - permanent - asset
Revenues-Expenses
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
credit balance - income statement - temporary - Revenue

28. 9th step of Accounting Cycle
debit balance - balance sheet - permanent - asset
Credit balance - Balance sheet and Retained Earnings - Permanent
prepare closing entry-post to general ledger
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense

29. Note Payable
debit balance - balance sheet - permanent - asset
Credit Balance - Balance Sheet - permanent - liability
similar to unearned revenue- liabilities
each owner has its own books - records - financial statements that are seperate.

30. Unearned revenue
longterm liabilities
credit balance - balance sheet - permanent - liabilities
debit balance - Balance sheet - Permanent - asset
similar to unearned revenue- liabilities

31. Utilities expense
(long-term) assets (building - land - equipment)
credit balance - balance sheet - permanent - liabilities
debit balance - income statement - temporary - expense
the original amount to purchase land is verifiable through the contract documents

32. Economic Equity
(long-term) assets (building - land - equipment)
Close out all revenue and expense accounts into retained earnings.
debit balance - balance sheet - permanent - asset
each owner has its own books - records - financial statements that are seperate.

33. Intangibles
copyright - long term assets - noncurrent
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
prepare adjusted trial balance

34. Current Ratio
Current Assets/Current Liabilities
debit balance - balance sheet - permanent - asset
prepare adjusted trial balance
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>

35. Goodwill
prepare Unadjusted trial balance
Contra Asset - noncurrent asset
debit balance - balance sheet - permanent - asset
wages payable - utilities payable - interest payable - unearned revenue - note payable

36. Calculating Interest Formula
(cash - accts revievable - inventory) turn into cash within 12 months
Payment x Rate x Time
Credit balance - Balance sheet and Retained Earnings - Permanent
Contributed Capital - Retained Earnings - Dividends

37. Calculating Cost depreciation
cost-salvage value/years of life
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
decrease equity - debit balance
Retained earnings beg. balance - Net income - dividends.

38. 4th step of Accounting Cycle
cost-salvage value/years of life
copyright - long term assets - noncurrent
determine the direction of the effect. debit or credit
prepare Unadjusted trial balance

39. 5th step of Accounting Cycle
record adjusting entries to general journal
prepare closing entry-post to general ledger
debit balance - Balance sheet - permanent - asset
analyze transactions from external events

40. Calculating Net Income
Revenues-Expenses
Net Income/Sales
does the equation remain in balance?
debit balance - Balance sheet - Permanent - asset

41. Current Assets
to those willing to take time to understand it
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
prepare financial statements
(cash - accts revievable - inventory) turn into cash within 12 months

42. Building
credit balance - balance sheet - permanent - liabilities
prepare post-closing trial balance
debit balance - Balance sheet - Permanent - asset
determine the direction of the effect. debit or credit

43. 8th step of Accounting Cycle
to those willing to take time to understand it
a company uses the same method each year for calculating inventory
prepare financial statements
Net Income/Sales

44. 1st step of Accounting Cycle
record transactions in general journal
analyze transactions from external events
(long-term) assets (building - land - equipment)
debit balance - income statement - temporary - expense

45. Materiality

46. 3rd step of Accounting Cycle
prepar journal to general ledger
decrease equity - debit balance
debit balance - income statement - temporary - expense
how we measure - assumes economic mean

47. 4th step of analyzing transactions
longterm liabilities
the original amount to purchase land is verifiable through the contract documents
prepare post-closing trial balance
does the equation remain in balance?

48. Retained Earnings
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
prepare Unadjusted trial balance
Contributed Capital - Retained Earnings - Dividends
Credit balance - Balance sheet and Retained Earnings - Permanent

49. Accts on balance sheet
prepare adjusted trial balance
Close out all revenue and expense accounts into retained earnings.
Credit balance - income statement - temporary - revenues
Assets - Liabilities - Equity

50. Accounting Equation
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
Sales Revenues
Credit Balance - Balance Sheet - Permanent - owners equity