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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
Closing Entries
Valuation Issue
We Recognize A Transaction
2. As an expense and the corresponding liability accumulate.
Accrued Expenses
Accounting Equation
Carrying Value
Actuaries
3. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Matching Rule
Corporations
Accumulated Depreciation accounts are deducted from..
Consignment Sale
4. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.
Going Concern
Accumulated Depreciation accounts are deducted from..
FASB
Securities Exchange Commission (SEC)
5. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.
Post-closing trial balance
Mutual Agency
Recognizing unrecorded - earned revenues
Cash Basis of Accounting
6. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
Dividends are what to SE
Interim Periods
Revenues are what to SE..
Continuity Assumption
7. 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
Periodicity
Income Statement
Allocating recorded costs between 2 or more accounting periods (ARC)
Recognition Point
8. 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.
Recognizing unrecorded - earned revenues
Statement of Retained Earnings:
Net Income =
Deferral
9. Accounting periods of less than a year.
Sole proprietorship
Liquidity
Recognizing unrecorded - earned revenues
Interim Periods
10. Focuses on assigning a monetary value to a business transaction and accounting for assets and liabilities.
Deferral
Mutual Agency
FASB
Valuation Issue
11. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Income Statement
Securities Exchange Commission (SEC)
Stockholder's Equity
Expenses are what to SE..
12. It's usual balance and is the side (debit or credit) that increases the amount.
Normal Balance
Stockholder's Equity =
IASB
Accounting Equation
13. A 12 month accounting period (Vary depending on slack seasons)
Valuation
Recognition Point
Accrued Expenses
Fiscal Year
14. The predetermined time at which a transaction should be recorded.
Recognition Point
Earnings Management
Accounting Equation
Recognition
15. Postponement of recognition of an expense already paid.
Deferral
Balance Sheet
Closing Entries
Net Income =
16. The ability to have enough cash to pay debts when they are due.
Board of Directors
Final Trial Balance
Liquidity
Depreciation
17. If you're having a bad year - to dump everything into something else like pensions
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18. Contributed Capital + Retained Earnings
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19. Match expenses with the revenues that they help generate - & vice versa.
Balance Sheet
When expenses exceed revenues..
Matching Rule
Accounting Equation
20. The difficulty of deciding when a business transaction should be recorded
Accumulated Depreciation accounts are deducted from..
Recognition
Not recorded as transactions
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
21. 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
Adjusting entries NEVER affect..
Allocating recorded costs between 2 or more accounting periods (ARC)
Interim Periods
Accrual Accounting
22. A separate account that is paired with a related account
Post-closing trial balance
'Big Bath Theory'
Dividends are what to SE
Contra Account
23. The manipulation of revenues and expenses to achieve a specific outcome.
Earnings Management
Adjusting entries NEVER affect..
Steps for Income Summary Account
Fiscal Year
24. A temporary account that summarizes all revenues and expenses for the period.
Matching Rule
Income Summary Account
Allocating recorded costs between 2 or more accounting periods (ARC)
GASB
25. Revenues - Expenses
Net Income =
Valuation
Statement of Retained Earnings:
Liquidity
26. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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27. 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)
Matching Rule
Consignment Sale
Income Statement
We Recognize A Transaction
28. Deferral of an expense! (Except land)
Steps for Income Summary Account
Expenses are what to SE..
Mutual Agency
Long term assets are..
29. Revenues that a company has earned but for which no entry has been made in the accounting records
Adjusting entries NEVER affect..
Accrued revenues
Net Income =
Footings
30. Their related asset accounts on the balance sheet
Final Trial Balance
Accumulated Depreciation accounts are deducted from..
Recognition Point
Permanent Accounts (Real Accounts)
31. Shows the changes in RE over an accounting period.
Statement of Retained Earnings:
Cash Basis of Accounting
Adjusting entries affect...
Accumulated Depreciation accounts are deducted from..
32. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Adjusting entries affect...
Recognition
Operating Activities
Footings
33. Sole worker of your business
Contra Account
Sole proprietorship
Statement of Retained Earnings:
Valuation
34. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured
Recognizing Unrecorded Expenses (RUE)
Valuation Issue
SEC Requirements for transactions
Valuation
35. Choosing the number of accounting periods
Stockholder's Equity =
Depreciation
Statement of Retained Earnings:
Continuity
36. Determines corporate policy - declares dividends and appoints management.
Balance Sheet
Board of Directors
Adjusting entries NEVER affect..
Income Statement
37. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Events that are recorded as transactions
Continuity Assumption
Going Concern
Adjusting entries NEVER affect..
38. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
Liquidity
Steps for Income Summary Account
Final Trial Balance
Board of Directors
39. Generally Accepted Accounting Principles - or guidelines for financial accounting.
Allocating recorded costs between 2 or more accounting periods (ARC)
Expenses are what to SE..
GASB
GAAP
40. Increases
Revenues are what to SE..
Recognizing unrecorded - earned revenues
Board of Directors
Accounting Equation
41. Payments received in advance - and deposits made on goods and services
Cost Principle
Expenses are what to SE..
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Board of Directors
42. The practice of recording transactions at exchange price at the point of recognition.
Actuaries
Cost Principle
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Events that are recorded as transactions
43. Contains only balance sheet accounts.
Continuity
When expenses exceed revenues..
Final Trial Balance
Expenses are what to SE..
44. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Actuaries
Post-closing trial balance
Footings
Recognizing unrecorded - earned revenues
45. Decreases
Income Summary Account
Expenses are what to SE..
Long term assets are..
Continuity
46. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Mutual Agency
Not recorded as transactions
Fiscal Year
Recognizing unrecorded - earned revenues
47. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
Cost Principle
Continuity Assumption
Allocating recorded costs between 2 or more accounting periods (ARC)
Accounting Equation
48. Decreases
Interim Periods
IASB
Dividends are what to SE
Balance Sheet
49. A net loss occurs
Long term assets are..
Continuity Assumption
When expenses exceed revenues..
Carrying Value
50. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.
IASB
Accumulated Depreciation accounts are deducted from..
'Big Bath Theory'
GASB