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