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