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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. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.
Periodicity
Corporations
Adjusting entries NEVER affect..
Mutual Agency
2. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Normal Balance
Post-closing trial balance
Cash Basis of Accounting
Accrued revenues
3. The manipulation of revenues and expenses to achieve a specific outcome.
Adjusted Trial Balance
Earnings Management
Accrued Expenses
Valuation Issue
4. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured
Income Statement
SEC Requirements for transactions
Board of Directors
Earnings Management
5. The practice of recording transactions at exchange price at the point of recognition.
Normal Balance
Going Concern
Actuaries
Cost Principle
6. 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.
Cash Basis of Accounting
Recognizing unrecorded - earned revenues
Matching Rule
Recognition Point
7. Choosing the number of accounting periods
Going Concern
Stockholder's Equity
Income Statement
Continuity
8. Accounting periods of less than a year.
Interim Periods
Income Summary Account
Earnings Management
Recognition
9. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
Permanent Accounts (Real Accounts)
Liquidity
Earnings Management
Steps for Income Summary Account
10. 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
Income Statement
Cost Principle
Allocating recorded costs between 2 or more accounting periods (ARC)
Accounting Equation
11. The amount allocated to any one accounting period.
Mutual Agency
Depreciation
We Recognize A Transaction
Deferral
12. Revenues - Expenses
Permanent Accounts (Real Accounts)
Net Income =
Matching Rule
Accumulated Depreciation accounts are deducted from..
13. Postponement of recognition of an expense already paid.
Income Summary Account
Interim Periods
Deferral
Accounting Equation
14. 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)
Periodicity
We Recognize A Transaction
Events that are recorded as transactions
Consignment Sale
15. The net amount - or 'Book Value' of an asset
Carrying Value
Mutual Agency
Dividends are what to SE
Accumulated Depreciation accounts are deducted from..
16. Contains only balance sheet accounts.
Adjusted Trial Balance
Valuation Issue
FASB
Final Trial Balance
17. Their related asset accounts on the balance sheet
Normal Balance
Accumulated Depreciation accounts are deducted from..
Sole proprietorship
Securities Exchange Commission (SEC)
18. Sole worker of your business
Recognizing unrecorded - earned revenues
Permanent Accounts (Real Accounts)
Sole proprietorship
Accounting Equation
19. Generally Accepted Accounting Principles - or guidelines for financial accounting.
Cash Basis of Accounting
Income Summary Account
GAAP
Footings
20. The ability to have enough cash to pay debts when they are due.
Periodicity
Recognizing Unrecorded Expenses (RUE)
Operating Activities
Liquidity
21. Cash account
Deferral
Valuation Issue
Adjusting entries NEVER affect..
Accrual Accounting
22. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Post-closing trial balance
Corporations
Securities Exchange Commission (SEC)
Statement of Retained Earnings:
23. Focuses on assigning a monetary value to a business transaction and accounting for assets and liabilities.
When expenses exceed revenues..
Accounting Equation
Recognition
Valuation Issue
24. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Board of Directors
Final Trial Balance
Allocating recorded costs between 2 or more accounting periods (ARC)
We Recognize A Transaction
25. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Going Concern
Earnings Management
Post-closing trial balance
Stockholder's Equity =
26. The difficulty of deciding when a business transaction should be recorded
Recognition
Permanent Accounts (Real Accounts)
'Big Bath Theory'
Continuity
27. A 12 month accounting period (Vary depending on slack seasons)
Matching Rule
Corporations
Adjusted Trial Balance
Fiscal Year
28. Decreases
Recognizing unrecorded - earned revenues
Mutual Agency
Dividends are what to SE
Steps for Income Summary Account
29. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Deferral
Mutual Agency
Not recorded as transactions
Cost Principle
30. Lists all accounts and their balances
Contra Account
Recognition Point
Adjusted Trial Balance
Accounting Equation
31. At a specific point in time (Certain Date)....Assets - Liabilities - Stockholder's equity.
Adjusting entries NEVER affect..
Balance Sheet
Interim Periods
Board of Directors
32. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Corporations
Going Concern
Adjusting entries affect...
Periodicity
33. Match expenses with the revenues that they help generate - & vice versa.
Income Statement
IASB
Matching Rule
Final Trial Balance
34. It's usual balance and is the side (debit or credit) that increases the amount.
Expenses are what to SE..
Normal Balance
Matching Rule
Operating Activities
35. Increases
SEC Requirements for transactions
Accumulated Depreciation Accounts
Sole proprietorship
Revenues are what to SE..
36. Used to accumulate the depreciation on each long-term asset
Accumulated Depreciation Accounts
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Board of Directors
Revenues are what to SE..
37. Customer buys a service - company pays an employee for service - company performs service
Events that are recorded as transactions
Closing Entries
Recognition
Income Statement
38. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Normal Balance
Final Trial Balance
Securities Exchange Commission (SEC)
Earnings Management
39. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
Continuity Assumption
GASB
Contra Account
Statement of Retained Earnings:
40. A separate account that is paired with a related account
Contra Account
Earnings Management
GAAP
Cost Principle
41. As an expense and the corresponding liability accumulate.
Accrued Expenses
Valuation
'Big Bath Theory'
We Recognize A Transaction
42. Accounting Equation
SEC Requirements for transactions
IASB
Accounting Equation
Accrued Expenses
43. The estimation of business's net income in terms of accounting periods.
Post-closing trial balance
Adjusting entries affect...
Periodicity
Fiscal Year
44. Forces a monetary value to a business transaction and accounting for the assets and liabilities that result from the transaction.
Permanent Accounts (Real Accounts)
Carrying Value
Valuation
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
45. If you're having a bad year - to dump everything into something else like pensions
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46. Deals with all techniques accountants use to apply the matching rule: Recording revenue when they are earned - Recording expenses when they are incurred - More closely related to profitability - Adjusting the accounts
Not recorded as transactions
Accrued Expenses
Accrual Accounting
Events that are recorded as transactions
47. Made at the end of accounting period..-They clear revenue - expense accounts - and dividends account of their balances. -Summarize a period's revenue and expenses by transferring the balances of them to the income summary account
Post-closing trial balance
Closing Entries
GASB
Sole proprietorship
48. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.
Deferral
Fiscal Year
Accumulated Depreciation accounts are deducted from..
GASB
49. Determines corporate policy - declares dividends and appoints management.
Normal Balance
Permanent Accounts (Real Accounts)
'Big Bath Theory'
Board of Directors
50. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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