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