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