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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. NonCurrent Liabilities
longterm liabilities
record adjusting entries to general journal
Net Income/Sales
credit balance - balance sheet - permanent - liabilities

2. Income Statement Revenues
analyze transactions from external events
a company uses the same method each year for calculating inventory
does the equation remain in balance?
Sales Revenues

3. Balance Sheet Liabilities
wages payable - utilities payable - interest payable - unearned revenue - note payable
prepare closing entry-post to general ledger
to those willing to take time to understand it
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue

4. Customer deposits
the original amount to purchase land is verifiable through the contract documents
similar to unearned revenue- liabilities
record adjusting entries to general journal
Net Income/Sales

5. Intangibles
companies must reduce the value of land - if the value is lower than its original cost.
copyright - long term assets - noncurrent
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
prepare post-closing trial balance

6. Calculating Cost depreciation
Assets - Liabilities - Equity
cost-salvage value/years of life
prepare Unadjusted trial balance
prepare post-closing trial balance

7. Going Concern
Credit balance - Balance sheet and Retained Earnings - Permanent
prepare Unadjusted trial balance
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
each owner has its own books - records - financial statements that are seperate.

8. Balance Sheet Assets
each owner has its own books - records - financial statements that are seperate.
how we measure - assumes economic mean
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

9. 8th step of Accounting Cycle
Net Income/Sales
prepare financial statements
prepare Unadjusted trial balance
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments

10. Calculating Interest Formula
Debit Balance - Retained Earnings - Temporary - Owners Equity
Payment x Rate x Time
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+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>

11. Dividends
Debit Balance - Retained Earnings - Temporary - Owners Equity
decrease equity - debit balance
Assets - Liabilities - Equity
determine the direction of the effect. debit or credit

12. NonCurrent Assets
Contra Asset - noncurrent asset
to those willing to take time to understand it
(long-term) assets (building - land - equipment)
copyright - long term assets - noncurrent

13. 9th step of Accounting Cycle
prepare closing entry-post to general ledger
record adjusting entries to general journal
Debit Balance - Income Statement - Temporary - expense
post journal to general ledger

14. Sales revenue
credit balance - income statement - temporary - Revenue
post journal to general ledger
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
longterm liabilities

15. Closing Entries
Close out all revenue and expense accounts into retained earnings.
credit balance - balance sheet - permanent - liabilities
analyze transactions from external events
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income

16. Current Assets
(cash - accts revievable - inventory) turn into cash within 12 months
Credit balance - Balance sheet and Retained Earnings - Permanent
Revenues and Expenses
Close out all revenue and expense accounts into retained earnings.

17. Accounts on Income Statement
Revenues and Expenses
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
debit balance - income statement - temporary - expense
prepar journal to general ledger

18. 4th step of analyzing transactions
credit balance - balance sheet - permanent - liabilities
does the equation remain in balance?
Credit balance - income statement - temporary - revenues
Revenues-Expenses

19. 5th step of Accounting Cycle
credit balance - income statement - temporary - Revenue
Credit balance - income statement - temporary - revenues
debit balance - Balance sheet - permanent - asset
record adjusting entries to general journal

20. Reliability
debit balance - balance sheet - permanent - asset
(long-term) assets (building - land - equipment)
the original amount to purchase land is verifiable through the contract documents
does the equation remain in balance?

21. 1st Step of Analying Transactions
Identify Accounts affected
Credit Balance - Balance Sheet - permanent - liability
Debit Balance - Income Statement - Temporary - expense
prepare Unadjusted trial balance

22. 6th step of Accounting Cycle
Assets - Liabilities - Equity
how we measure - assumes economic mean
record adjusting entries to general journal
post journal to general ledger

23. 4th step of Accounting Cycle
Debit Balance - Income Statement - Temporary - expense
prepare Unadjusted 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.
debit balance - balance sheet - permanent - asset

24. Unearned revenue
an appraised value for land gives additional information that is useful to investors
credit balance - balance sheet - permanent - liabilities
Retained earnings beg. balance - Net income - dividends.
prepare Unadjusted trial balance

25. Interest Revenue
Credit balance - income statement - temporary - revenues
prepare adjusted trial balance
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.

26. Accounts Recievable
Contra Asset - noncurrent asset
how we measure - assumes economic mean
Debit Balance - Balance sheet - permanent - asset
prepare post-closing trial balance

27. Income Satement Expenses
debit balance - balance sheet - permanent - asset
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
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense

28. Consistency
Revenues-Expenses
does the equation remain in balance?
a company uses the same method each year for calculating inventory
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue

29. 3rd step of analyzing transactions
debit balance - Balance sheet - Permanent - asset
to those willing to take time to understand it
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
determine the direction of the effect. debit or credit

30. 10th step of Accounting Cycle
Net Income/Sales
Revenues and Expenses
prepare post-closing trial balance
copyright - long term assets - noncurrent

31. Dividends
Credit balance - Balance sheet and Retained Earnings - Permanent
Credit Balance - Balance Sheet - Permanent - owners equity
decrease equity - debit balance
prepare closing entry-post to general ledger

32. Relevance
record adjusting entries to general journal
an appraised value for land gives additional information that is useful to investors
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
debit balance - income statement - temporary - expense

33. Note Payable
Debit Balance - Income Statement - temporary - Expense
prepare Unadjusted trial balance
Credit Balance - Balance Sheet - permanent - liability
Assets - Liabilities - Equity

34. Understandability
copyright - long term assets - noncurrent
Assets - Liabilities - Equity
to those willing to take time to understand it
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.

35. Accts on balance sheet
record transactions in general journal
wages payable - utilities payable - interest payable - unearned revenue - note payable
Assets - Liabilities - Equity
each owner has its own books - records - financial statements that are seperate.

36. Cost of Goods Sold
Debit Balance - Income Statement - Temporary - expense
Sales Revenues
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

37. Accumlated depreciation
a company uses the same method each year for calculating inventory
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
debit balance - income statement - temporary - expense
Contra Asset - noncurrent asset

38. 2nd step of analyzing transactions
longterm liabilities
prepare Unadjusted trial balance
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
each owner has its own books - records - financial statements that are seperate.

39. Accounting Equation
Payment x Rate x Time
debit balance - balance sheet - permanent - asset
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
Revenues and Expenses

40. Balance sheet Equity
debit balance - Balance sheet - permanent - asset
Contributed Capital - Retained Earnings - Dividends
Debit Balance - Balance sheet - permanent - asset
decrease equity - debit balance

41. Inventory
debit balance - Balance sheet - permanent - asset
prepare closing entry-post to general ledger
Revenues-Expenses
credit balance - balance sheet - permanent - liabilities

42. Current Ratio
Current Assets/Current Liabilities
Identify Accounts affected
prepare adjusted trial balance
similar to unearned revenue- liabilities

43. Retained Earnings
Net Income/Sales
Credit balance - Balance sheet and Retained Earnings - Permanent
Debit Balance - Income Statement - Temporary - expense
an appraised value for land gives additional information that is useful to investors

44. Economic Equity
each owner has its own books - records - financial statements that are seperate.
Revenues and Expenses
Close out all revenue and expense accounts into retained earnings.
Revenues-Expenses

45. Accumulated depriciation
Identify Accounts affected
credit balance - balance sheet - permanent - liabilities
to those willing to take time to understand it
credit balance - income statement - temporary - Revenue

46. 7th step of Accounting Cycle
Credit balance - income statement - temporary - revenues
prepare adjusted trial balance
credit balance - balance sheet - permanent - liabilities
Net Income/Sales

47. 3rd step of Accounting Cycle
decrease equity - debit balance
longterm liabilities
prepar journal to general ledger
Credit Balance - Balance Sheet - Permanent - owners equity

48. Building
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
each owner has its own books - records - financial statements that are seperate.
cost-salvage value/years of life
debit balance - Balance sheet - Permanent - asset

49. Accts on Statement of Retained Earnings
decrease equity - debit balance
Retained earnings beg. balance - Net income - dividends.
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
Sales Revenues

50. Profit Margin %
debit balance - balance sheet - permanent - asset
Net Income/Sales
Current Assets/Current Liabilities
Credit Balance - Balance Sheet - permanent - liability