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Test your basic knowledge |
CLEP Financial Accounting
Start Test
Study First
Subjects
:
clep
,
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. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Final Trial Balance
We Recognize A Transaction
Balance Sheet
Accumulated Depreciation Accounts
2. A 12 month accounting period (Vary depending on slack seasons)
Liquidity
Fiscal Year
Accounting Equation
Periodicity
3. At a specific point in time (Certain Date)....Assets - Liabilities - Stockholder's equity.
Adjusting entries NEVER affect..
Income Statement
Events that are recorded as transactions
Balance Sheet
4. Summarizes revenues earned and expenses incurred by a business over an accounting period. (Shows whether a business achieved its profitability goal)...Revenues - Expenses - Income taxes
Valuation Issue
Expenses are what to SE..
Long term assets are..
Income Statement
5. When an entity sends out a product to a distributor and takes a certain percentage for what they sell it for (Usually occurs when they have excess inventory)
Consignment Sale
Accumulated Depreciation accounts are deducted from..
Continuity
Long term assets are..
6. Deals with all techniques accountants use to apply the matching rule: Recording revenue when they are earned - Recording expenses when they are incurred - More closely related to profitability - Adjusting the accounts
Accrual Accounting
'Big Bath Theory'
Permanent Accounts (Real Accounts)
Accrued revenues
7. Match expenses with the revenues that they help generate - & vice versa.
Recognizing unrecorded - earned revenues
We Recognize A Transaction
Dividends are what to SE
Matching Rule
8. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured
Statement of Retained Earnings:
Allocating recorded costs between 2 or more accounting periods (ARC)
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
SEC Requirements for transactions
9. A temporary account that summarizes all revenues and expenses for the period.
Statement of Retained Earnings:
We Recognize A Transaction
Income Summary Account
Stockholder's Equity =
10. Selling goods and services to customers - employing managers and workers.
Permanent Accounts (Real Accounts)
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Adjusting entries affect...
Operating Activities
11. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.
GASB
Net Income =
Periodicity
Permanent Accounts (Real Accounts)
12. The practice of recording transactions at exchange price at the point of recognition.
Income Statement
Cost Principle
Actuaries
Stockholder's Equity =
13. Cash account
Adjusting entries NEVER affect..
Depreciation
Recognizing Unrecorded Expenses (RUE)
Closing Entries
14. Revenues that a company has earned but for which no entry has been made in the accounting records
Matching Rule
Recognition Point
Accumulated Depreciation accounts are deducted from..
Accrued revenues
15. It's usual balance and is the side (debit or credit) that increases the amount.
Normal Balance
Stockholder's Equity =
Stockholder's Equity
Adjusted Trial Balance
16. Contains only balance sheet accounts.
Periodicity
Final Trial Balance
Valuation Issue
Earnings Management
17. Increases
When expenses exceed revenues..
Normal Balance
Income Summary Account
Revenues are what to SE..
18. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Allocating recorded costs between 2 or more accounting periods (ARC)
Adjusting entries affect...
Mutual Agency
19. As an expense and the corresponding liability accumulate.
Accounting Equation
Accrued Expenses
Accrual Accounting
Consignment Sale
20. A separate account that is paired with a related account
Actuaries
Long term assets are..
Cost Principle
Contra Account
21. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
Adjusted Trial Balance
Accrual Accounting
Allocating recorded costs between 2 or more accounting periods (ARC)
Consignment Sale
22. The difficulty of deciding when a business transaction should be recorded
Carrying Value
Steps for Income Summary Account
Post-closing trial balance
Recognition
23. Revenues - Expenses
Adjusting entries NEVER affect..
Recognition Point
Net Income =
Liquidity
24. Contributed Capital + Retained Earnings
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25. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
FASB
Steps for Income Summary Account
Matching Rule
Consignment Sale
26. Customer buys a service - company pays an employee for service - company performs service
Events that are recorded as transactions
Recognizing unrecorded - earned revenues
Stockholder's Equity
GASB
27. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Deferral
Footings
Revenues are what to SE..
Not recorded as transactions
28. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Recognition
Accumulated Depreciation Accounts
Post-closing trial balance
Periodicity
29. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Corporations
Adjusting entries NEVER affect..
Recognizing unrecorded - earned revenues
Periodicity
30. Sole worker of your business
When expenses exceed revenues..
Sole proprietorship
GASB
Corporations
31. A net loss occurs
IASB
Accumulated Depreciation Accounts
Valuation
When expenses exceed revenues..
32. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
Accounting Equation
Permanent Accounts (Real Accounts)
Closing Entries
Board of Directors
33. Used to accumulate the depreciation on each long-term asset
Valuation Issue
Matching Rule
Accumulated Depreciation Accounts
Deferral
34. Revenue that a company has earned for providing a service but for which it has not billed or been paid by the end of the accounting period.
Mutual Agency
Recognizing unrecorded - earned revenues
Fiscal Year
Continuity Assumption
35. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
Interim Periods
Board of Directors
Continuity Assumption
Accumulated Depreciation accounts are deducted from..
36. The estimation of business's net income in terms of accounting periods.
Stockholder's Equity
Going Concern
We Recognize A Transaction
Periodicity
37. Determines corporate policy - declares dividends and appoints management.
Board of Directors
GAAP
Allocating recorded costs between 2 or more accounting periods (ARC)
Accounting Equation
38. Deferral of an expense! (Except land)
Recognizing unrecorded - earned revenues
Long term assets are..
Actuaries
Adjusting entries affect...
39. If you're having a bad year - to dump everything into something else like pensions
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40. The amount allocated to any one accounting period.
Accumulated Depreciation Accounts
Events that are recorded as transactions
Expenses are what to SE..
Depreciation
41. The net amount - or 'Book Value' of an asset
Carrying Value
Depreciation
SEC Requirements for transactions
Interim Periods
42. Accounting for revenues in the period in which cash is received and for expenses in the period where cash is paid. More closely related to the goal of liquidity.
Cash Basis of Accounting
Valuation Issue
Permanent Accounts (Real Accounts)
Liquidity
43. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Recognizing Unrecorded Expenses (RUE)
Deferral
Going Concern
FASB
44. Accounting periods of less than a year.
Balance Sheet
Adjusted Trial Balance
Long term assets are..
Interim Periods
45. Shows the changes in RE over an accounting period.
Consignment Sale
Interim Periods
Recognizing unrecorded - earned revenues
Statement of Retained Earnings:
46. Working totals
Stockholder's Equity =
Liquidity
Footings
Earnings Management
47. Their related asset accounts on the balance sheet
Continuity
Periodicity
Accumulated Depreciation accounts are deducted from..
Steps for Income Summary Account
48. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.
Continuity Assumption
Mutual Agency
Matching Rule
Net Income =
49. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Recognition
Securities Exchange Commission (SEC)
Balance Sheet
Permanent Accounts (Real Accounts)
50. Made at the end of accounting period..-They clear revenue - expense accounts - and dividends account of their balances. -Summarize a period's revenue and expenses by transferring the balances of them to the income summary account
Valuation Issue
Closing Entries
Liquidity
Continuity Assumption