Test your basic knowledge |

Business Accounting Basics

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
companies must reduce the value of land - if the value is lower than its original cost.
Credit Balance - Balance Sheet - Permanent - owners equity
analyze transactions from external events
debit balance - balance sheet - permanent - asset

2. Prepaid insurance
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
Net Income/Sales
debit balance - balance sheet - permanent - asset
debit balance - income statement - temporary - expense

3. Balance sheet Equity
Contra Asset - noncurrent asset
to those willing to take time to understand it
Contributed Capital - Retained Earnings - Dividends
prepare closing entry-post to general ledger

4. Goodwill
debit balance - balance sheet - permanent - asset
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
Identify Accounts affected
wages payable - utilities payable - interest payable - unearned revenue - note payable

5. Accumlated depreciation
Contra Asset - noncurrent asset
debit balance - balance sheet - permanent - asset
prepare closing entry-post to general ledger
prepar journal to general ledger

6. Accounts on Income Statement
Retained earnings beg. balance - Net income - dividends.
debit balance - Balance sheet - Permanent - asset
Contra Asset - noncurrent asset
Revenues and Expenses

7. Income Satement Expenses
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
Assets - Liabilities - Equity
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
debit balance - Balance sheet - permanent - asset

8. Materiality
Revenues and Expenses
Debit Balance - Balance sheet - permanent - asset
Sales Revenues
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.

9. 9th step of Accounting Cycle
an appraised value for land gives additional information that is useful to investors
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
decrease equity - debit balance
prepare closing entry-post to general ledger

10. Calculating Interest Formula
Debit Balance - Income Statement - temporary - Expense
decrease equity - debit balance
Payment x Rate x Time
(long-term) assets (building - land - equipment)

11. Income Statement Revenues
Contra Asset - noncurrent asset
Sales Revenues
record transactions in general journal
credit balance - income statement - temporary - Revenue

12. 7th step of Accounting Cycle
prepare adjusted trial balance
prepar journal to general ledger
prepare post-closing trial balance
decrease equity - debit balance

13. Sales revenue
Net Income/Sales
Credit Balance - Balance Sheet - Permanent - owners equity
credit balance - balance sheet - permanent - liabilities
credit balance - income statement - temporary - Revenue

14. Accts on Statement of Retained Earnings
how we measure - assumes economic mean
Credit Balance - Balance Sheet - Permanent - owners equity
an appraised value for land gives additional information that is useful to investors
Retained earnings beg. balance - Net income - dividends.

15. Relevance
prepare closing entry-post to general ledger
longterm liabilities
an appraised value for land gives additional information that is useful to investors
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.

16. Balance Sheet Assets
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
Debit Balance - Retained Earnings - Temporary - Owners Equity
analyze transactions from external events

17. Cash Principle
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
(cash - accts revievable - inventory) turn into cash within 12 months
an appraised value for land gives additional information that is useful to investors
similar to unearned revenue- liabilities

18. Understandability
(cash - accts revievable - inventory) turn into cash within 12 months
analyze transactions from external events
credit balance - balance sheet - permanent - liabilities
to those willing to take time to understand it

19. 2nd step of Accounting Cycle
record transactions in general journal
determine the direction of the effect. debit or credit
Revenues and Expenses
how we measure - assumes economic mean

20. Current Ratio
longterm liabilities
Current Assets/Current Liabilities
credit balance - balance sheet - permanent - liabilities
each owner has its own books - records - financial statements that are seperate.

21. 4th step of analyzing transactions
does the equation remain in balance?
how we measure - assumes economic mean
credit balance - balance sheet - permanent - liabilities
Contra Asset - noncurrent asset

22. Retained Earnings
Credit balance - Balance sheet and Retained Earnings - Permanent
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
prepare Unadjusted trial balance
does the equation remain in balance?

23. Balance Sheet Liabilities
Credit Balance - Balance Sheet - permanent - liability
determine the direction of the effect. debit or credit
wages payable - utilities payable - interest payable - unearned revenue - note payable
debit balance - balance sheet - permanent - asset

24. Closing Entries
Close out all revenue and expense accounts into retained earnings.
(long-term) assets (building - land - equipment)
debit balance - balance sheet - permanent - asset
debit balance - balance sheet - permanent - asset

25. Accumulated depriciation
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
credit balance - balance sheet - permanent - liabilities
copyright - long term assets - noncurrent
Debit Balance - Balance sheet - permanent - asset

26. Accounting Equation
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
post journal to general ledger

27. Dividends
decrease equity - debit balance
Assets - Liabilities - Equity
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
analyze transactions from external events

28. Customer deposits
Assets - Liabilities - Equity
analyze transactions from external events
prepare Unadjusted trial balance
similar to unearned revenue- liabilities

29. Interest Expense
Credit balance - income statement - temporary - revenues
Debit Balance - Income Statement - temporary - Expense
record adjusting entries to general journal
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.

30. Economic Equity
debit balance - income statement - temporary - expense
Close out all revenue and expense accounts into retained earnings.
each owner has its own books - records - financial statements that are seperate.
Identify Accounts affected

31. Profit Margin %
credit balance - balance sheet - permanent - liabilities
Credit balance - Balance sheet and Retained Earnings - Permanent
how we measure - assumes economic mean
Net Income/Sales

32. 3rd step of Accounting Cycle
Identify Accounts affected
Retained earnings beg. balance - Net income - dividends.
prepar journal to general ledger
record transactions in general journal

33. Accts on balance sheet
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
Contributed Capital - Retained Earnings - Dividends
Assets - Liabilities - Equity
debit balance - Balance sheet - permanent - asset

34. Current Assets
prepare financial statements
each owner has its own books - records - financial statements that are seperate.
debit balance - balance sheet - permanent - asset
(cash - accts revievable - inventory) turn into cash within 12 months

35. Accounts Recievable
Identify Accounts affected
prepare post-closing trial balance
Debit Balance - Balance sheet - permanent - asset
wages payable - utilities payable - interest payable - unearned revenue - note payable

36. 6th step of Accounting Cycle
Credit Balance - Balance Sheet - permanent - liability
cost-salvage value/years of life
credit balance - balance sheet - permanent - liabilities
post journal to general ledger

37. Unearned revenue
record adjusting entries to general journal
(long-term) assets (building - land - equipment)
credit balance - balance sheet - permanent - liabilities
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments

38. Reliability
the original amount to purchase land is verifiable through the contract documents
Credit Balance - Balance Sheet - Permanent - owners equity
Debit Balance - Retained Earnings - Temporary - Owners Equity
cost-salvage value/years of life

39. Utilities expense
debit balance - income statement - temporary - expense
prepar journal to general ledger
prepare post-closing trial balance
Credit Balance - Balance Sheet - Permanent - owners equity

40. NonCurrent Liabilities
Sales Revenues
an appraised value for land gives additional information that is useful to investors
prepare financial statements
longterm liabilities

41. Intangibles
Revenues and Expenses
copyright - long term assets - noncurrent
record adjusting entries to general journal
Credit balance - Balance sheet and Retained Earnings - Permanent

42. Multistep Income Statement
prepare closing entry-post to general ledger
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
Debit Balance - Income Statement - temporary - Expense
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income

43. Dividends
Current Assets/Current Liabilities
prepare Unadjusted trial balance
post journal to general ledger
Debit Balance - Retained Earnings - Temporary - Owners Equity

44. 4th step of Accounting Cycle
prepare Unadjusted trial balance
Debit Balance - Balance sheet - permanent - asset
Revenues and Expenses
post journal to general ledger

45. Consistency
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
a company uses the same method each year for calculating inventory
prepar journal to general ledger

46. Going Concern
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
analyze transactions from external events
longterm liabilities
prepar journal to general ledger

47. 3rd step of analyzing transactions
decrease equity - debit balance
determine the direction of the effect. debit or credit
debit balance - balance sheet - permanent - asset
debit balance - Balance sheet - permanent - asset

48. 1st Step of Analying Transactions
Sales Revenues
Identify Accounts affected
how we measure - assumes economic mean
companies must reduce the value of land - if the value is lower than its original cost.

49. Cost of Goods Sold
debit balance - balance sheet - permanent - asset
prepare closing entry-post to general ledger
Debit Balance - Income Statement - Temporary - expense
Contra Asset - noncurrent asset

50. Calculating Net Income
Revenues-Expenses
Close out all revenue and expense accounts into retained earnings.
companies must reduce the value of land - if the value is lower than its original cost.
cost-salvage value/years of life

Test your basic knowledge |

Business Accounting Basics

13 Skills Types | 550 Pages | Only $9.95 | PDF / EPub, Kindle Ready

Top Scores

Link to This Test

Related Subjects