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