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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.
'Big Bath Theory'
Deferral
Corporations
Recognition Point
2. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Long term assets are..
We Recognize A Transaction
Adjusting entries affect...
Adjusting entries NEVER affect..
3. The practice of recording transactions at exchange price at the point of recognition.
Accumulated Depreciation Accounts
Valuation Issue
Cost Principle
Not recorded as transactions
4. A temporary account that summarizes all revenues and expenses for the period.
IASB
Events that are recorded as transactions
Permanent Accounts (Real Accounts)
Income Summary Account
5. Payments received in advance - and deposits made on goods and services
Net Income =
Carrying Value
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
IASB
6. The predetermined time at which a transaction should be recorded.
Recognition Point
Fiscal Year
Board of Directors
Going Concern
7. Their related asset accounts on the balance sheet
Valuation
Accumulated Depreciation accounts are deducted from..
Contra Account
When expenses exceed revenues..
8. Sole worker of your business
Contra Account
GASB
Sole proprietorship
Expenses are what to SE..
9. Revenues that a company has earned but for which no entry has been made in the accounting records
Stockholder's Equity
Accrued revenues
Revenues are what to SE..
Interim Periods
10. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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11. Increases
We Recognize A Transaction
Accumulated Depreciation accounts are deducted from..
Expenses are what to SE..
Revenues are what to SE..
12. Wages - Interest - and Income taxes that have been incurred but have not been recorded during an accounting period.
Deferral
Recognizing Unrecorded Expenses (RUE)
GASB
Stockholder's Equity =
13. Accounting periods of less than a year.
Interim Periods
Accrued Expenses
Balance Sheet
Matching Rule
14. The estimation of business's net income in terms of accounting periods.
Periodicity
Adjusting entries affect...
Recognition Point
Sole proprietorship
15. Contains only balance sheet accounts.
Closing Entries
Final Trial Balance
Long term assets are..
Recognition
16. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
Balance Sheet
Mutual Agency
Cost Principle
Allocating recorded costs between 2 or more accounting periods (ARC)
17. 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
Corporations
Accrual Accounting
Post-closing trial balance
Final Trial Balance
18. The amount allocated to any one accounting period.
Actuaries
Dividends are what to SE
Depreciation
Accrued Expenses
19. The difficulty of deciding when a business transaction should be recorded
Recognition
Consignment Sale
FASB
Going Concern
20. People that estimate various things
Actuaries
Valuation Issue
Final Trial Balance
Recognizing Unrecorded Expenses (RUE)
21. Accounting Equation
Corporations
Accounting Equation
Stockholder's Equity
Continuity Assumption
22. Lists all accounts and their balances
Adjusting entries NEVER affect..
Earnings Management
Recognition
Adjusted Trial Balance
23. Cash account
Adjusting entries NEVER affect..
Interim Periods
Cash Basis of Accounting
Income Summary Account
24. At a specific point in time (Certain Date)....Assets - Liabilities - Stockholder's equity.
Post-closing trial balance
Accumulated Depreciation Accounts
Balance Sheet
Cash Basis of Accounting
25. 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
Revenues are what to SE..
Closing Entries
Allocating recorded costs between 2 or more accounting periods (ARC)
Accumulated Depreciation Accounts
26. The ability to have enough cash to pay debts when they are due.
Periodicity
Accrued Expenses
Liquidity
Long term assets are..
27. The net amount - or 'Book Value' of an asset
Carrying Value
Accrued revenues
Recognition
Interim Periods
28. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Accrued revenues
Adjusting entries affect...
Income Summary Account
Post-closing trial balance
29. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Final Trial Balance
We Recognize A Transaction
Depreciation
Accumulated Depreciation accounts are deducted from..
30. A separate account that is paired with a related account
Contra Account
Corporations
Adjusted Trial Balance
Revenues are what to SE..
31. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.
Long term assets are..
FASB
Accounting Equation
Deferral
32. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.
Normal Balance
Recognition
Going Concern
Mutual Agency
33. Postponement of recognition of an expense already paid.
IASB
Deferral
Accrual Accounting
Corporations
34. 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
Board of Directors
We Recognize A Transaction
Continuity
35. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.
IASB
GASB
Post-closing trial balance
Continuity
36. 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)
Recognizing unrecorded - earned revenues
Cost Principle
Income Statement
37. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured
Carrying Value
Accounting Equation
SEC Requirements for transactions
Adjusting entries affect...
38. Customer buys a service - company pays an employee for service - company performs service
Recognizing unrecorded - earned revenues
Events that are recorded as transactions
Recognition
Actuaries
39. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Dividends are what to SE
Securities Exchange Commission (SEC)
When expenses exceed revenues..
Stockholder's Equity =
40. Selling goods and services to customers - employing managers and workers.
Matching Rule
Operating Activities
Statement of Retained Earnings:
Recognizing unrecorded - earned revenues
41. Shows the changes in RE over an accounting period.
Accumulated Depreciation Accounts
Statement of Retained Earnings:
Corporations
Recognition Point
42. Deferral of an expense! (Except land)
Carrying Value
Final Trial Balance
Accumulated Depreciation accounts are deducted from..
Long term assets are..
43. 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.
Recognizing unrecorded - earned revenues
Contra Account
'Big Bath Theory'
Continuity Assumption
44. Match expenses with the revenues that they help generate - & vice versa.
Sole proprietorship
Matching Rule
Liquidity
Carrying Value
45. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Accrued revenues
Carrying Value
Income Statement
Not recorded as transactions
46. Focuses on assigning a monetary value to a business transaction and accounting for assets and liabilities.
Valuation Issue
Closing Entries
GAAP
Valuation
47. 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)
Statement of Retained Earnings:
Consignment Sale
Fiscal Year
Periodicity
48. If you're having a bad year - to dump everything into something else like pensions
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49. As an expense and the corresponding liability accumulate.
We Recognize A Transaction
Accrued revenues
Accrued Expenses
Cash Basis of Accounting
50. A 12 month accounting period (Vary depending on slack seasons)
Accrued Expenses
Footings
Stockholder's Equity
Fiscal Year