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