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