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. 1st Step of Analying Transactions
prepare financial statements
Debit Balance - Income Statement - Temporary - expense
Credit Balance - Balance Sheet - permanent - liability
Identify Accounts affected

2. 4th step of analyzing transactions
does the equation remain in balance?
record transactions in general journal
Contributed Capital - Retained Earnings - Dividends
debit balance - income statement - temporary - expense

3. Interest Revenue
credit balance - balance sheet - permanent - liabilities
Credit balance - income statement - temporary - revenues
Identify Accounts affected
Debit Balance - Retained Earnings - Temporary - Owners Equity

4. Retained Earnings
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue
Credit balance - Balance sheet and Retained Earnings - Permanent
wages payable - utilities payable - interest payable - unearned revenue - note payable
Debit Balance - Income Statement - Temporary - expense

5. Inventory
debit balance - Balance sheet - permanent - asset
record adjusting entries to general journal
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
Contra Asset - noncurrent asset

6. Balance Sheet Assets
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
analyze transactions from external events
copyright - long term assets - noncurrent
debit balance - income statement - temporary - expense

7. 2nd step of Accounting Cycle
record transactions in general journal
cost-salvage value/years of life
Credit Balance - Balance Sheet - Permanent - owners equity
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.

8. Unearned revenue
Sales Revenues
credit balance - balance sheet - permanent - liabilities
analyze transactions from external events
decrease equity - debit balance

9. Sales revenue
Current Assets/Current Liabilities
(cash - accts revievable - inventory) turn into cash within 12 months
credit balance - income statement - temporary - Revenue
prepare post-closing trial balance

10. 1st step of Accounting Cycle
analyze transactions from external events
Revenues-Expenses
prepare post-closing trial balance
Net Income/Sales

11. 2nd step of analyzing transactions
prepare financial statements
Assets - Liabilities - Equity
each owner has its own books - records - financial statements that are seperate.
clarify accounts as Asset - Liabilities - Owners Equity - Expense - Revenue

12. 8th step of Accounting Cycle
Credit balance - Balance sheet and Retained Earnings - Permanent
Debit Balance - Income Statement - temporary - Expense
Debit Balance - Income Statement - Temporary - expense
prepare financial statements

13. Prepaid insurance
copyright - long term assets - noncurrent
post journal to general ledger
prepare closing entry-post to general ledger
debit balance - balance sheet - permanent - asset

14. Interest Expense
prepare financial statements
Close out all revenue and expense accounts into retained earnings.
similar to unearned revenue- liabilities
Debit Balance - Income Statement - temporary - Expense

15. Materiality

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183

16. Consistency
Current Assets/Current Liabilities
a company uses the same method each year for calculating inventory
copyright - long term assets - noncurrent
longterm liabilities

17. 3rd step of Accounting Cycle
cost-salvage value/years of life
Assets - Liabilities - Equity
post journal to general ledger
prepar journal to general ledger

18. Cash Principle
record assets of cost paid to acquire them - continue to value assets at historical cost until sold - more objective than market cost.
the original amount to purchase land is verifiable through the contract documents
record adjusting entries to general journal
credit balance - income statement - temporary - Revenue

19. 9th step of Accounting Cycle
prepare closing entry-post to general ledger
Revenues-Expenses
Net Income/Sales
prepare adjusted trial balance

20. Accounts Recievable
Retained earnings beg. balance - Net income - dividends.
Debit Balance - Balance sheet - permanent - asset
debit balance - income statement - temporary - expense
decrease equity - debit balance

21. Dividends
record adjusting entries to general journal
prepare Unadjusted trial balance
credit balance - balance sheet - permanent - liabilities
decrease equity - debit balance

22. Going Concern
decrease equity - debit balance
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
to those willing to take time to understand it
prepare closing entry-post to general ledger

23. Accts on balance sheet
Assets - Liabilities - Equity
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
to those willing to take time to understand it
debit balance - Balance sheet - Permanent - asset

24. Multistep Income Statement
how we measure - assumes economic mean
the original amount to purchase land is verifiable through the contract documents
prepare adjusted trial balance
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income

25. Accumlated depreciation
debit balance - Balance sheet - Permanent - asset
Contra Asset - noncurrent asset
debit balance - balance sheet - permanent - asset
credit balance - income statement - temporary - Revenue

26. Goodwill
debit balance - balance sheet - permanent - asset
Payment x Rate x Time
each owner has its own books - records - financial statements that are seperate.
prepare post-closing trial balance

27. Calculating Interest Formula
post journal to general ledger
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.
Payment x Rate x Time
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>

28. Balance Sheet Liabilities
Debit Balance - Income Statement - temporary - Expense
credit balance - balance sheet - permanent - liabilities
wages payable - utilities payable - interest payable - unearned revenue - note payable
Net Income/Sales

29. Current Ratio
Debit Balance - Income Statement - Temporary - expense
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
Current Assets/Current Liabilities

30. Intangibles
Credit Balance - Balance Sheet - permanent - liability
copyright - long term assets - noncurrent
Cash - Accounts recievable - supplies - inventory - prepaid rent - equipment - accumulated depreciation - goodwill - investments
does the equation remain in balance?

31. Accts on Statement of Retained Earnings
credit balance - income statement - temporary - Revenue
Retained earnings beg. balance - Net income - dividends.
the original amount to purchase land is verifiable through the contract documents
prepare Unadjusted trial balance

32. Common Stock
Payment x Rate x Time
wages payable - utilities payable - interest payable - unearned revenue - note payable
credit balance - balance sheet - permanent - liabilities
Credit Balance - Balance Sheet - Permanent - owners equity

33. Conservatism
companies must reduce the value of land - if the value is lower than its original cost.
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income
(long-term) assets (building - land - equipment)
Credit balance - income statement - temporary - revenues

34. Understandability
record adjusting entries to general journal
Debit Balance - Income Statement - temporary - Expense
similar to unearned revenue- liabilities
to those willing to take time to understand it

35. Income Satement Expenses
an appraised value for land gives additional information that is useful to investors
Revenues and Expenses
Revenues-Expenses
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense

36. Income Statement Revenues
Net Income/Sales
similar to unearned revenue- liabilities
Sales Revenues
assumes business will fully indefinitely ink the foreseeable futyre - justifies one of historical cost.

37. Accumulated depriciation
credit balance - balance sheet - permanent - liabilities
longterm liabilities
Cost of Goods Sold - Utilities Expense - Supplies Expense - Wages Expense - Depreciation Expense - Interest Expense - Rent Expense
prepare adjusted trial balance

38. Profit Margin %
Debit Balance - Income Statement - Temporary - expense
similar to unearned revenue- liabilities
companies must reduce the value of land - if the value is lower than its original cost.
Net Income/Sales

39. Relevance
an appraised value for land gives additional information that is useful to investors
Debit Balance - Balance sheet - permanent - asset
to those willing to take time to understand it
longterm liabilities

40. NonCurrent Liabilities
decrease equity - debit balance
longterm liabilities
credit balance - income statement - temporary - Revenue
Revenues-Expenses

41. Accounting Equation
Assets= Liabilities+Owners Equity<Contributed Capital><Retained Earnings-Revenues - Expenses>
wages payable - utilities payable - interest payable - unearned revenue - note payable
Revenues-Expenses
record adjusting entries to general journal

42. Calculating Net Income
Revenues-Expenses
prepare post-closing trial balance
decrease equity - debit balance
Credit balance - income statement - temporary - revenues

43. Customer deposits
credit balance - income statement - temporary - Revenue
prepare financial statements
determine the direction of the effect. debit or credit
similar to unearned revenue- liabilities

44. Current Assets
(cash - accts revievable - inventory) turn into cash within 12 months
prepare closing entry-post to general ledger
companies must use GAAP for all significant transactions that will affect an investor's decisions - but insignificant transactions may be treated in alternative ways.
prepare financial statements

45. Monetary Unit
Net Income/Sales
companies must reduce the value of land - if the value is lower than its original cost.
how we measure - assumes economic mean
Sales-CGS=Gross Profit-selling expenses-admin expenses=Incom for operations+interest revenue-Interest expense=Income before tax-tax expense=Net income

46. 3rd step of analyzing transactions
determine the direction of the effect. debit or credit
Retained earnings beg. balance - Net income - dividends.
post journal to general ledger
longterm liabilities

47. 6th step of Accounting Cycle
debit balance - balance sheet - permanent - asset
debit balance - Balance sheet - permanent - asset
post journal to general ledger
how we measure - assumes economic mean

48. Note Payable
Credit Balance - Balance Sheet - permanent - liability
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.
Close out all revenue and expense accounts into retained earnings.

49. Building
(long-term) assets (building - land - equipment)
Retained earnings beg. balance - Net income - dividends.
debit balance - Balance sheet - Permanent - asset
credit balance - balance sheet - permanent - liabilities

50. Utilities expense
credit balance - balance sheet - permanent - liabilities
Assets - Liabilities - Equity
debit balance - income statement - temporary - expense
cost-salvage value/years of life