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