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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. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Recognition
Adjusting entries affect...
Cost Principle
Corporations
2. Revenues - Expenses
Final Trial Balance
SEC Requirements for transactions
Contra Account
Net Income =
3. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
IASB
Not recorded as transactions
Stockholder's Equity
Adjusting entries NEVER affect..
4. At a specific point in time (Certain Date)....Assets - Liabilities - Stockholder's equity.
Adjusted Trial Balance
When expenses exceed revenues..
Securities Exchange Commission (SEC)
Balance Sheet
5. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Adjusting entries affect...
Accrued revenues
'Big Bath Theory'
Cash Basis of Accounting
6. The estimation of business's net income in terms of accounting periods.
Closing Entries
Periodicity
Stockholder's Equity
Continuity Assumption
7. Focuses on assigning a monetary value to a business transaction and accounting for assets and liabilities.
Valuation Issue
Permanent Accounts (Real Accounts)
Consignment Sale
Going Concern
8. A net loss occurs
When expenses exceed revenues..
Closing Entries
Net Income =
Long term assets are..
9. The amount allocated to any one accounting period.
Depreciation
Recognition
Contra Account
Permanent Accounts (Real Accounts)
10. Selling goods and services to customers - employing managers and workers.
Carrying Value
Sole proprietorship
Income Summary Account
Operating Activities
11. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
Adjusting entries affect...
Cost Principle
Allocating recorded costs between 2 or more accounting periods (ARC)
Steps for Income Summary Account
12. 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)
Steps for Income Summary Account
Post-closing trial balance
Normal Balance
13. Postponement of recognition of an expense already paid.
Deferral
Statement of Retained Earnings:
Earnings Management
Footings
14. It's usual balance and is the side (debit or credit) that increases the amount.
Balance Sheet
Income Statement
Normal Balance
Steps for Income Summary Account
15. Revenues that a company has earned but for which no entry has been made in the accounting records
Accrued revenues
When expenses exceed revenues..
Adjusted Trial Balance
Recognizing Unrecorded Expenses (RUE)
16. Choosing the number of accounting periods
Liquidity
Normal Balance
IASB
Continuity
17. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
Stockholder's Equity
Continuity Assumption
Allocating recorded costs between 2 or more accounting periods (ARC)
GAAP
18. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.
Post-closing trial balance
Accumulated Depreciation Accounts
FASB
Accrued revenues
19. 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
Statement of Retained Earnings:
Closing Entries
Balance Sheet
Accumulated Depreciation Accounts
20. Accounting for revenues in the period in which cash is received and for expenses in the period where cash is paid. More closely related to the goal of liquidity.
Accumulated Depreciation accounts are deducted from..
Cash Basis of Accounting
Valuation
Accounting Equation
21. Forces a monetary value to a business transaction and accounting for the assets and liabilities that result from the transaction.
Valuation
Accrual Accounting
Stockholder's Equity =
Events that are recorded as transactions
22. Cash account
Allocating recorded costs between 2 or more accounting periods (ARC)
Stockholder's Equity
Sole proprietorship
Adjusting entries NEVER affect..
23. Deferral of an expense! (Except land)
FASB
Long term assets are..
Actuaries
Securities Exchange Commission (SEC)
24. Contributed Capital + Retained Earnings
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25. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Actuaries
Recognizing Unrecorded Expenses (RUE)
Post-closing trial balance
Earnings Management
26. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Recognition
Events that are recorded as transactions
Going Concern
Depreciation
27. The ability to have enough cash to pay debts when they are due.
Cost Principle
Accrued Expenses
Liquidity
Interim Periods
28. If you're having a bad year - to dump everything into something else like pensions
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29. Accounting periods of less than a year.
Operating Activities
Board of Directors
Recognizing Unrecorded Expenses (RUE)
Interim Periods
30. Working totals
Events that are recorded as transactions
Footings
Going Concern
'Big Bath Theory'
31. Increases
Periodicity
Events that are recorded as transactions
Revenues are what to SE..
Earnings Management
32. Payments received in advance - and deposits made on goods and services
Corporations
Income Summary Account
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Sole proprietorship
33. Contains only balance sheet accounts.
Final Trial Balance
Carrying Value
Contra Account
IASB
34. The net amount - or 'Book Value' of an asset
Carrying Value
Steps for Income Summary Account
Periodicity
Matching Rule
35. A temporary account that summarizes all revenues and expenses for the period.
Liquidity
FASB
Income Summary Account
Recognition
36. Generally Accepted Accounting Principles - or guidelines for financial accounting.
Allocating recorded costs between 2 or more accounting periods (ARC)
Long term assets are..
IASB
GAAP
37. Determines corporate policy - declares dividends and appoints management.
Steps for Income Summary Account
Board of Directors
Sole proprietorship
Securities Exchange Commission (SEC)
38. As an expense and the corresponding liability accumulate.
Net Income =
SEC Requirements for transactions
Accrued Expenses
Corporations
39. Accounting Equation
Stockholder's Equity
Adjusted Trial Balance
Accounting Equation
Contra Account
40. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Long term assets are..
Steps for Income Summary Account
We Recognize A Transaction
Carrying Value
41. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
Cash Basis of Accounting
Net Income =
Expenses are what to SE..
Steps for Income Summary Account
42. Sole worker of your business
Long term assets are..
Sole proprietorship
Net Income =
Continuity
43. Shows the changes in RE over an accounting period.
Statement of Retained Earnings:
Continuity Assumption
Recognizing unrecorded - earned revenues
FASB
44. The predetermined time at which a transaction should be recorded.
Recognizing Unrecorded Expenses (RUE)
Adjusted Trial Balance
Corporations
Recognition Point
45. 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
SEC Requirements for transactions
Income Statement
Adjusting entries NEVER affect..
Interim Periods
46. Customer buys a service - company pays an employee for service - company performs service
Events that are recorded as transactions
Accrual Accounting
Final Trial Balance
Accounting Equation
47. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Securities Exchange Commission (SEC)
Depreciation
Interim Periods
GASB
48. Their related asset accounts on the balance sheet
Recognizing Unrecorded Expenses (RUE)
Final Trial Balance
Valuation Issue
Accumulated Depreciation accounts are deducted from..
49. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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50. People that estimate various things
Carrying Value
Long term assets are..
Actuaries
IASB