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Test your basic knowledge |
CLEP Financial Accounting
Start Test
Study First
Subjects
:
clep
,
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. The amount allocated to any one accounting period.
Continuity Assumption
Depreciation
Revenues are what to SE..
Matching Rule
2. A 12 month accounting period (Vary depending on slack seasons)
Matching Rule
Deferral
Fiscal Year
Valuation Issue
3. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
When expenses exceed revenues..
Permanent Accounts (Real Accounts)
Board of Directors
Accrued Expenses
4. Contains only balance sheet accounts.
GASB
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Adjusted Trial Balance
Final Trial Balance
5. Lists all accounts and their balances
Operating Activities
Adjusted Trial Balance
Recognition Point
Recognition
6. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Continuity Assumption
Corporations
Sole proprietorship
GAAP
7. The practice of recording transactions at exchange price at the point of recognition.
Continuity
Continuity Assumption
Cost Principle
Accumulated Depreciation Accounts
8. Cash account
Adjusting entries NEVER affect..
Events that are recorded as transactions
Operating Activities
Allocating recorded costs between 2 or more accounting periods (ARC)
9. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Steps for Income Summary Account
Continuity Assumption
Adjusting entries affect...
Long term assets are..
10. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Adjusting entries affect...
Post-closing trial balance
Long term assets are..
Stockholder's Equity =
11. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
Steps for Income Summary Account
Corporations
Earnings Management
Contra Account
12. Selling goods and services to customers - employing managers and workers.
Securities Exchange Commission (SEC)
FASB
Fiscal Year
Operating Activities
13. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Balance Sheet
Continuity
Not recorded as transactions
Recognizing unrecorded - earned revenues
14. Summarizes revenues earned and expenses incurred by a business over an accounting period. (Shows whether a business achieved its profitability goal)...Revenues - Expenses - Income taxes
Statement of Retained Earnings:
Long term assets are..
Income Statement
Accrual Accounting
15. Decreases
Dividends are what to SE
Events that are recorded as transactions
Going Concern
Mutual Agency
16. The ability to have enough cash to pay debts when they are due.
Accrual Accounting
Liquidity
We Recognize A Transaction
Not recorded as transactions
17. Postponement of recognition of an expense already paid.
SEC Requirements for transactions
Adjusted Trial Balance
Deferral
Valuation Issue
18. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Statement of Retained Earnings:
We Recognize A Transaction
GAAP
Consignment Sale
19. Determines corporate policy - declares dividends and appoints management.
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Balance Sheet
Board of Directors
Depreciation
20. Shows the changes in RE over an accounting period.
Adjusting entries NEVER affect..
Recognizing unrecorded - earned revenues
Accrual Accounting
Statement of Retained Earnings:
21. Increases
Normal Balance
Revenues are what to SE..
Board of Directors
Corporations
22. When an entity sends out a product to a distributor and takes a certain percentage for what they sell it for (Usually occurs when they have excess inventory)
Closing Entries
Accrued revenues
Consignment Sale
Carrying Value
23. Revenue that a company has earned for providing a service but for which it has not billed or been paid by the end of the accounting period.
We Recognize A Transaction
Recognizing unrecorded - earned revenues
Cost Principle
Consignment Sale
24. It's usual balance and is the side (debit or credit) that increases the amount.
Normal Balance
Accounting Equation
Adjusting entries affect...
Interim Periods
25. The predetermined time at which a transaction should be recorded.
Operating Activities
Cost Principle
Recognition Point
Not recorded as transactions
26. Working totals
Normal Balance
Income Summary Account
Footings
Income Statement
27. Revenues that a company has earned but for which no entry has been made in the accounting records
Earnings Management
GASB
Accrued revenues
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
28. The net amount - or 'Book Value' of an asset
Income Summary Account
Valuation Issue
Carrying Value
Contra Account
29. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Adjusted Trial Balance
Securities Exchange Commission (SEC)
Cash Basis of Accounting
GASB
30. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Cost Principle
Going Concern
Actuaries
Steps for Income Summary Account
31. If you're having a bad year - to dump everything into something else like pensions
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32. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.
FASB
Deferral
Not recorded as transactions
Securities Exchange Commission (SEC)
33. Accounting Equation
Contra Account
Mutual Agency
Accounting Equation
Cash Basis of Accounting
34. Wages - Interest - and Income taxes that have been incurred but have not been recorded during an accounting period.
Recognizing unrecorded - earned revenues
Accrued revenues
Depreciation
Recognizing Unrecorded Expenses (RUE)
35. A net loss occurs
When expenses exceed revenues..
Steps for Income Summary Account
Stockholder's Equity
Adjusted Trial Balance
36. The difficulty of deciding when a business transaction should be recorded
Accrued Expenses
Board of Directors
Recognition
Stockholder's Equity
37. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured
SEC Requirements for transactions
IASB
Deferral
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
38. A temporary account that summarizes all revenues and expenses for the period.
Cash Basis of Accounting
Income Summary Account
Recognition Point
Accrued revenues
39. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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40. Focuses on assigning a monetary value to a business transaction and accounting for assets and liabilities.
Operating Activities
Accrued revenues
Matching Rule
Valuation Issue
41. Forces a monetary value to a business transaction and accounting for the assets and liabilities that result from the transaction.
Valuation
Steps for Income Summary Account
Accrual Accounting
Valuation Issue
42. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.
Consignment Sale
Fiscal Year
Mutual Agency
Stockholder's Equity =
43. Payments received in advance - and deposits made on goods and services
Board of Directors
Operating Activities
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
GAAP
44. Match expenses with the revenues that they help generate - & vice versa.
Net Income =
Matching Rule
Corporations
Accrued revenues
45. Deferral of an expense! (Except land)
Closing Entries
IASB
Long term assets are..
Liquidity
46. Choosing the number of accounting periods
Operating Activities
SEC Requirements for transactions
Continuity
Not recorded as transactions
47. Generally Accepted Accounting Principles - or guidelines for financial accounting.
FASB
Contra Account
GAAP
Stockholder's Equity
48. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
Corporations
Going Concern
Closing Entries
Continuity Assumption
49. Sole worker of your business
Net Income =
Adjusted Trial Balance
Liquidity
Sole proprietorship
50. As an expense and the corresponding liability accumulate.
Recognition Point
Normal Balance
Balance Sheet
Accrued Expenses