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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. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
Recognizing unrecorded - earned revenues
Stockholder's Equity =
Permanent Accounts (Real Accounts)
Accounting Equation
2. Selling goods and services to customers - employing managers and workers.
Cost Principle
Accounting Equation
Cash Basis of Accounting
Operating Activities
3. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.
Mutual Agency
Not recorded as transactions
Allocating recorded costs between 2 or more accounting periods (ARC)
FASB
4. 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
Adjusting entries NEVER affect..
Continuity
Closing Entries
Liquidity
5. Decreases
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
FASB
Operating Activities
Dividends are what to SE
6. The practice of recording transactions at exchange price at the point of recognition.
Cost Principle
SEC Requirements for transactions
Footings
Accrued revenues
7. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
Adjusted Trial Balance
Steps for Income Summary Account
Corporations
Recognition
8. A net loss occurs
Going Concern
Income Summary Account
Accrual Accounting
When expenses exceed revenues..
9. Lists all accounts and their balances
Accumulated Depreciation Accounts
Adjusted Trial Balance
Closing Entries
Actuaries
10. Determines corporate policy - declares dividends and appoints management.
Earnings Management
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Board of Directors
Cost Principle
11. 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
Expenses are what to SE..
Steps for Income Summary Account
Operating Activities
12. As an expense and the corresponding liability accumulate.
Going Concern
Accumulated Depreciation Accounts
Accrued Expenses
Carrying Value
13. Contributed Capital + Retained Earnings
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14. Accounting Equation
Valuation
Operating Activities
Accounting Equation
Accumulated Depreciation Accounts
15. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Recognizing unrecorded - earned revenues
Mutual Agency
Securities Exchange Commission (SEC)
Expenses are what to SE..
16. Shows the changes in RE over an accounting period.
Statement of Retained Earnings:
Mutual Agency
Valuation
Adjusting entries NEVER affect..
17. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
SEC Requirements for transactions
Normal Balance
Continuity Assumption
Valuation Issue
18. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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19. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Recognition Point
We Recognize A Transaction
Depreciation
Stockholder's Equity =
20. Accounting periods of less than a year.
Adjusting entries NEVER affect..
Interim Periods
Corporations
Contra Account
21. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.
Statement of Retained Earnings:
Liquidity
Cash Basis of Accounting
FASB
22. If you're having a bad year - to dump everything into something else like pensions
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23. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Post-closing trial balance
Final Trial Balance
Allocating recorded costs between 2 or more accounting periods (ARC)
Corporations
24. Payments received in advance - and deposits made on goods and services
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Recognizing Unrecorded Expenses (RUE)
Normal Balance
Accrual Accounting
25. The net amount - or 'Book Value' of an asset
Dividends are what to SE
Long term assets are..
Carrying Value
We Recognize A Transaction
26. Working totals
Footings
Final Trial Balance
Carrying Value
Accumulated Depreciation accounts are deducted from..
27. Increases
Valuation Issue
Adjusting entries affect...
Accrued revenues
Revenues are what to SE..
28. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Post-closing trial balance
Cash Basis of Accounting
Adjusting entries affect...
Not recorded as transactions
29. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured
Board of Directors
When expenses exceed revenues..
SEC Requirements for transactions
Interim Periods
30. Decreases
Expenses are what to SE..
Periodicity
Corporations
Accumulated Depreciation Accounts
31. The amount allocated to any one accounting period.
Adjusting entries affect...
Balance Sheet
Continuity Assumption
Depreciation
32. Cash account
Accumulated Depreciation Accounts
Balance Sheet
Corporations
Adjusting entries NEVER affect..
33. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
Recognition Point
Fiscal Year
Allocating recorded costs between 2 or more accounting periods (ARC)
Accounting Equation
34. The estimation of business's net income in terms of accounting periods.
Adjusting entries affect...
Accrual Accounting
Income Statement
Periodicity
35. The manipulation of revenues and expenses to achieve a specific outcome.
Carrying Value
Stockholder's Equity
Earnings Management
Interim Periods
36. 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)
Operating Activities
Accumulated Depreciation Accounts
Consignment Sale
Statement of Retained Earnings:
37. A separate account that is paired with a related account
'Big Bath Theory'
Mutual Agency
Contra Account
Matching Rule
38. A 12 month accounting period (Vary depending on slack seasons)
Permanent Accounts (Real Accounts)
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Fiscal Year
Accounting Equation
39. The difficulty of deciding when a business transaction should be recorded
Recognition
Sole proprietorship
Footings
Normal Balance
40. Used to accumulate the depreciation on each long-term asset
Operating Activities
Adjusting entries affect...
Accumulated Depreciation Accounts
Depreciation
41. 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
Statement of Retained Earnings:
Accounting Equation
Carrying Value
Accrual Accounting
42. Postponement of recognition of an expense already paid.
Recognition
Adjusting entries NEVER affect..
Deferral
Income Summary Account
43. Generally Accepted Accounting Principles - or guidelines for financial accounting.
Operating Activities
GAAP
Final Trial Balance
Balance Sheet
44. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
'Big Bath Theory'
Cost Principle
Permanent Accounts (Real Accounts)
Going Concern
45. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Cash Basis of Accounting
Continuity
Normal Balance
Not recorded as transactions
46. Revenues that a company has earned but for which no entry has been made in the accounting records
FASB
Net Income =
Accrued revenues
Final Trial Balance
47. 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.
Depreciation
Income Summary Account
Cash Basis of Accounting
We Recognize A Transaction
48. Forces a monetary value to a business transaction and accounting for the assets and liabilities that result from the transaction.
Accounting Equation
Events that are recorded as transactions
Valuation
Deferral
49. A temporary account that summarizes all revenues and expenses for the period.
Post-closing trial balance
Accumulated Depreciation Accounts
Income Summary Account
Fiscal Year
50. Their related asset accounts on the balance sheet
Adjusted Trial Balance
Net Income =
Valuation Issue
Accumulated Depreciation accounts are deducted from..