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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 manipulation of revenues and expenses to achieve a specific outcome.
Dividends are what to SE
Normal Balance
Earnings Management
Contra Account
2. Shows the changes in RE over an accounting period.
Carrying Value
SEC Requirements for transactions
Net Income =
Statement of Retained Earnings:
3. Forces a monetary value to a business transaction and accounting for the assets and liabilities that result from the transaction.
Balance Sheet
Footings
Valuation
Net Income =
4. Customer buys a service - company pays an employee for service - company performs service
Adjusting entries affect...
'Big Bath Theory'
Events that are recorded as transactions
Matching Rule
5. A net loss occurs
Accrual Accounting
When expenses exceed revenues..
Events that are recorded as transactions
Recognition Point
6. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
IASB
Accrued Expenses
Contra Account
Post-closing trial balance
7. Generally Accepted Accounting Principles - or guidelines for financial accounting.
Dividends are what to SE
GAAP
Allocating recorded costs between 2 or more accounting periods (ARC)
Adjusted Trial Balance
8. 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
Actuaries
GASB
Accumulated Depreciation accounts are deducted from..
9. A separate account that is paired with a related account
Contra Account
Adjusting entries NEVER affect..
Cash Basis of Accounting
Matching Rule
10. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Accrual Accounting
Cash Basis of Accounting
We Recognize A Transaction
Permanent Accounts (Real Accounts)
11. The predetermined time at which a transaction should be recorded.
Recognition Point
Expenses are what to SE..
Board of Directors
Accrued revenues
12. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Corporations
Continuity
Adjusting entries affect...
Income Statement
13. The net amount - or 'Book Value' of an asset
Footings
Carrying Value
Board of Directors
Interim Periods
14. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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15. The difficulty of deciding when a business transaction should be recorded
Cash Basis of Accounting
Recognition
We Recognize A Transaction
'Big Bath Theory'
16. People that estimate various things
Accrued revenues
Matching Rule
Long term assets are..
Actuaries
17. Contributed Capital + Retained Earnings
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18. Accounting periods of less than a year.
Interim Periods
GAAP
Recognizing Unrecorded Expenses (RUE)
Valuation
19. Selling goods and services to customers - employing managers and workers.
Actuaries
Stockholder's Equity =
Operating Activities
Steps for Income Summary Account
20. Used to accumulate the depreciation on each long-term asset
Cash Basis of Accounting
Accumulated Depreciation Accounts
When expenses exceed revenues..
'Big Bath Theory'
21. The practice of recording transactions at exchange price at the point of recognition.
Accumulated Depreciation accounts are deducted from..
Revenues are what to SE..
Cost Principle
FASB
22. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.
GASB
Accounting Equation
Events that are recorded as transactions
We Recognize A Transaction
23. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Going Concern
GAAP
Interim Periods
Balance Sheet
24. Lists all accounts and their balances
Adjusted Trial Balance
Steps for Income Summary Account
Accounting Equation
Stockholder's Equity
25. Increases
Post-closing trial balance
Adjusting entries NEVER affect..
GAAP
Revenues are what to SE..
26. It's usual balance and is the side (debit or credit) that increases the amount.
SEC Requirements for transactions
Valuation Issue
Normal Balance
Deferral
27. Revenues that a company has earned but for which no entry has been made in the accounting records
Accumulated Depreciation Accounts
Events that are recorded as transactions
Stockholder's Equity
Accrued revenues
28. Determines corporate policy - declares dividends and appoints management.
Matching Rule
Board of Directors
GASB
When expenses exceed revenues..
29. Payments received in advance - and deposits made on goods and services
Accrued Expenses
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Footings
Revenues are what to SE..
30. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.
Liquidity
Accrued Expenses
Mutual Agency
Normal Balance
31. A temporary account that summarizes all revenues and expenses for the period.
Periodicity
Valuation
Income Summary Account
Net Income =
32. 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
Deferral
Securities Exchange Commission (SEC)
We Recognize A Transaction
33. As an expense and the corresponding liability accumulate.
Accumulated Depreciation Accounts
Events that are recorded as transactions
Accrued Expenses
Going Concern
34. Match expenses with the revenues that they help generate - & vice versa.
Matching Rule
Closing Entries
Sole proprietorship
Corporations
35. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Sole proprietorship
Income Summary Account
Not recorded as transactions
'Big Bath Theory'
36. 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.
Cash Basis of Accounting
GASB
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Earnings Management
37. Postponement of recognition of an expense already paid.
Allocating recorded costs between 2 or more accounting periods (ARC)
Deferral
Valuation Issue
Expenses are what to SE..
38. The amount allocated to any one accounting period.
Steps for Income Summary Account
Depreciation
When expenses exceed revenues..
Allocating recorded costs between 2 or more accounting periods (ARC)
39. Deferral of an expense! (Except land)
Interim Periods
Long term assets are..
We Recognize A Transaction
When expenses exceed revenues..
40. The estimation of business's net income in terms of accounting periods.
Events that are recorded as transactions
Accrual Accounting
Periodicity
Adjusting entries NEVER affect..
41. Decreases
GAAP
Expenses are what to SE..
Accrued revenues
Recognizing unrecorded - earned revenues
42. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Not recorded as transactions
Post-closing trial balance
Securities Exchange Commission (SEC)
Cash Basis of Accounting
43. 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
Closing Entries
Fiscal Year
Balance Sheet
Accrual Accounting
44. 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)
Board of Directors
Statement of Retained Earnings:
Consignment Sale
Steps for Income Summary Account
45. Contains only balance sheet accounts.
Interim Periods
GASB
Steps for Income Summary Account
Final Trial Balance
46. Cash account
Adjusting entries NEVER affect..
Earnings Management
Consignment Sale
'Big Bath Theory'
47. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
Adjusting entries NEVER affect..
Cash Basis of Accounting
Permanent Accounts (Real Accounts)
Expenses are what to SE..
48. 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
FASB
When expenses exceed revenues..
Closing Entries
GAAP
49. The ability to have enough cash to pay debts when they are due.
Liquidity
Valuation
Not recorded as transactions
Corporations
50. Accounting Equation
Accrued Expenses
GASB
Accounting Equation
Cost Principle