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