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Test your basic knowledge |
Business Accounting Basics
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Study First
Subject
:
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. Goodwill
debit balance - balance sheet - permanent - asset
to those willing to take time to understand it
Credit balance - income statement - temporary - revenues
prepar journal to general ledger
2. Calculating Cost depreciation
cost-salvage value/years of life
Assets - Liabilities - Equity
Debit Balance - Retained Earnings - Temporary - Owners Equity
longterm liabilities
3. Relevance
debit balance - balance sheet - permanent - asset
an appraised value for land gives additional information that is useful to investors
Credit Balance - Balance Sheet - permanent - liability
how we measure - assumes economic mean
4. 4th step of Accounting Cycle
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
credit balance - balance sheet - permanent - liabilities
prepare Unadjusted trial balance
decrease equity - debit balance
5. 4th step of analyzing transactions
debit balance - balance sheet - permanent - asset
does the equation remain in balance?
companies must reduce the value of land - if the value is lower than its original cost.
similar to unearned revenue- liabilities
6. Income Statement Revenues
Revenues-Expenses
record transactions in general journal
Sales Revenues
the original amount to purchase land is verifiable through the contract documents
7. Current Assets
Assets - Liabilities - Equity
(cash - accts revievable - inventory) turn into cash within 12 months
analyze transactions from external events
Revenues and Expenses
8. 1st step of Accounting Cycle
Sales Revenues
record adjusting entries to general journal
Retained earnings beg. balance - Net income - dividends.
analyze transactions from external events
9. 3rd step of analyzing transactions
credit balance - income statement - temporary - Revenue
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
determine the direction of the effect. debit or credit
Credit balance - income statement - temporary - revenues
10. Sales revenue
credit balance - income statement - temporary - Revenue
does the equation remain in balance?
Debit Balance - Income Statement - Temporary - expense
credit balance - balance sheet - permanent - liabilities
11. Multistep Income Statement
credit balance - income statement - temporary - Revenue
Revenues and Expenses
(long-term) assets (building - land - equipment)
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
12. Consistency
(long-term) assets (building - land - equipment)
prepare financial statements
debit balance - Balance sheet - permanent - asset
a company uses the same method each year for calculating inventory
13. Closing Entries
record adjusting entries to general journal
Credit Balance - Balance Sheet - permanent - liability
a company uses the same method each year for calculating inventory
Close out all revenue and expense accounts into retained earnings.
14. Profit Margin %
a company uses the same method each year for calculating inventory
debit balance - Balance sheet - permanent - asset
wages payable - utilities payable - interest payable - unearned revenue - note payable
Net Income/Sales
15. Accounting Equation
Contra Asset - noncurrent asset
Revenues-Expenses
copyright - long term assets - noncurrent
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
16. Intangibles
determine the direction of the effect. debit or credit
an appraised value for land gives additional information that is useful to investors
Credit balance - income statement - temporary - revenues
copyright - long term assets - noncurrent
17. 1st Step of Analying Transactions
Debit Balance - Balance sheet - permanent - asset
Debit Balance - Retained Earnings - Temporary - Owners Equity
Identify Accounts affected
Retained earnings beg. balance - Net income - dividends.
18. Balance sheet Equity
debit balance - balance sheet - permanent - asset
debit balance - Balance sheet - Permanent - asset
prepare adjusted trial balance
Contributed Capital - Retained Earnings - Dividends
19. 9th step of Accounting Cycle
wages payable - utilities payable - interest payable - unearned revenue - note payable
prepare closing entry-post to general ledger
an appraised value for land gives additional information that is useful to investors
Assets - Liabilities - Equity
20. Calculating Interest Formula
prepare Unadjusted trial balance
Payment x Rate x Time
Revenues and Expenses
Credit Balance - Balance Sheet - permanent - liability
21. Prepaid insurance
debit balance - income statement - temporary - expense
Debit Balance - Income Statement - temporary - Expense
debit balance - balance sheet - permanent - asset
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
22. Calculating Net Income
debit balance - Balance sheet - Permanent - asset
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
Revenues-Expenses
an appraised value for land gives additional information that is useful to investors
23. Going Concern
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
Revenues and Expenses
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
determine the direction of the effect. debit or credit
24. Understandability
debit balance - income statement - temporary - expense
prepare post-closing trial balance
to those willing to take time to understand it
prepare Unadjusted trial balance
25. Note Payable
Close out all revenue and expense accounts into retained earnings.
debit balance - balance sheet - permanent - asset
credit balance - income statement - temporary - Revenue
Credit Balance - Balance Sheet - permanent - liability
26. Monetary Unit
prepare financial statements
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
Sales Revenues
how we measure - assumes economic mean
27. Reliability
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
debit balance - balance sheet - permanent - asset
record transactions in general journal
the original amount to purchase land is verifiable through the contract documents
28. Cash Principle
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
post journal to general ledger
debit balance - Balance sheet - Permanent - asset
each owner has its own books - records - financial statements that are seperate.
29. Dividends
decrease equity - debit balance
Net Income/Sales
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
copyright - long term assets - noncurrent
30. Utilities expense
debit balance - income statement - temporary - expense
Contra Asset - noncurrent asset
Credit balance - income statement - temporary - revenues
similar to unearned revenue- liabilities
31. Dividends
debit balance - income statement - temporary - expense
Sales Revenues
debit balance - balance sheet - permanent - asset
Debit Balance - Retained Earnings - Temporary - Owners Equity
32. NonCurrent Liabilities
Credit balance - income statement - temporary - revenues
record transactions in general journal
longterm liabilities
does the equation remain in balance?
33. Accts on balance sheet
(cash - accts revievable - inventory) turn into cash within 12 months
Assets - Liabilities - Equity
an appraised value for land gives additional information that is useful to investors
Credit Balance - Balance Sheet - Permanent - owners equity
34. Economic Equity
analyze transactions from external events
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
each owner has its own books - records - financial statements that are seperate.
prepare adjusted trial balance
35. 6th step of Accounting Cycle
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
prepare closing entry-post to general ledger
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
post journal to general ledger
36. Unearned revenue
credit balance - balance sheet - permanent - liabilities
wages payable - utilities payable - interest payable - unearned revenue - note payable
similar to unearned revenue- liabilities
Current Assets/Current Liabilities
37. Common Stock
prepare closing entry-post to general ledger
Credit Balance - Balance Sheet - Permanent - owners equity
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
cost-salvage value/years of life
38. Retained Earnings
Credit balance - Balance sheet and Retained Earnings - Permanent
Payment x Rate x Time
prepar journal to general ledger
similar to unearned revenue- liabilities
39. Balance Sheet Liabilities
Credit Balance - Balance Sheet - permanent - liability
debit balance - income statement - temporary - expense
Current Assets/Current Liabilities
wages payable - utilities payable - interest payable - unearned revenue - note payable
40. Balance Sheet Assets
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
Identify Accounts affected
record transactions in general journal
Debit Balance - Retained Earnings - Temporary - Owners Equity
41. Accounts Recievable
prepare financial statements
companies must reduce the value of land - if the value is lower than its original cost.
credit balance - balance sheet - permanent - liabilities
Debit Balance - Balance sheet - permanent - asset
42. Accounts on Income Statement
Revenues and Expenses
post journal to general ledger
determine the direction of the effect. debit or credit
(long-term) assets (building - land - equipment)
43. 5th step of Accounting Cycle
record adjusting entries to general journal
(cash - accts revievable - inventory) turn into cash within 12 months
longterm liabilities
credit balance - balance sheet - permanent - liabilities
44. Interest Revenue
post journal to general ledger
Credit balance - income statement - temporary - revenues
copyright - long term assets - noncurrent
(long-term) assets (building - land - equipment)
45. Accts on Statement of Retained Earnings
Revenues and Expenses
Retained earnings beg. balance - Net income - dividends.
prepar journal to general ledger
Debit Balance - Income Statement - Temporary - expense
46. 2nd step of analyzing transactions
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
Debit Balance - Income Statement - Temporary - expense
(cash - accts revievable - inventory) turn into cash within 12 months
does the equation remain in balance?
47. Customer deposits
Credit balance - income statement - temporary - revenues
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
similar to unearned revenue- liabilities
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
48. Inventory
debit balance - Balance sheet - permanent - asset
copyright - long term assets - noncurrent
Credit balance - income statement - temporary - revenues
decrease equity - debit balance
49. Conservatism
(cash - accts revievable - inventory) turn into cash within 12 months
prepare Unadjusted trial balance
companies must reduce the value of land - if the value is lower than its original cost.
debit balance - balance sheet - permanent - asset
50. 3rd step of Accounting Cycle
Net Income/Sales
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
prepar journal to general ledger
Contra Asset - noncurrent asset
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