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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. The ability to have enough cash to pay debts when they are due.
Recognition
Stockholder's Equity =
Liquidity
Earnings Management
2. Payments received in advance - and deposits made on goods and services
Recognition
'Big Bath Theory'
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Sole proprietorship
3. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Accrued Expenses
Consignment Sale
Corporations
Actuaries
4. Contributed Capital + Retained Earnings
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5. 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
Dividends are what to SE
Going Concern
When expenses exceed revenues..
Income Statement
6. The amount allocated to any one accounting period.
GASB
Recognizing unrecorded - earned revenues
Adjusting entries affect...
Depreciation
7. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Accounting Equation
Accrued revenues
Cash Basis of Accounting
We Recognize A Transaction
8. 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
Periodicity
Accumulated Depreciation accounts are deducted from..
Earnings Management
9. Deferral of an expense! (Except land)
Long term assets are..
Liquidity
Contra Account
'Big Bath Theory'
10. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
Balance Sheet
Not recorded as transactions
Continuity
Allocating recorded costs between 2 or more accounting periods (ARC)
11. Decreases
Recognition
Accumulated Depreciation accounts are deducted from..
Expenses are what to SE..
Consignment Sale
12. The predetermined time at which a transaction should be recorded.
Recognition Point
Corporations
Recognition
Normal Balance
13. Sole worker of your business
Periodicity
Sole proprietorship
Dividends are what to SE
Income Statement
14. As an expense and the corresponding liability accumulate.
Accrued Expenses
Stockholder's Equity
Final Trial Balance
'Big Bath Theory'
15. Used to accumulate the depreciation on each long-term asset
IASB
Carrying Value
Revenues are what to SE..
Accumulated Depreciation Accounts
16. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Statement of Retained Earnings:
SEC Requirements for transactions
Not recorded as transactions
Earnings Management
17. The estimation of business's net income in terms of accounting periods.
Periodicity
When expenses exceed revenues..
Adjusting entries affect...
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
18. Lists all accounts and their balances
We Recognize A Transaction
Actuaries
Valuation
Adjusted Trial Balance
19. 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
Fiscal Year
Stockholder's Equity =
Permanent Accounts (Real Accounts)
20. A 12 month accounting period (Vary depending on slack seasons)
Fiscal Year
SEC Requirements for transactions
Sole proprietorship
When expenses exceed revenues..
21. Focuses on assigning a monetary value to a business transaction and accounting for assets and liabilities.
Statement of Retained Earnings:
Net Income =
Valuation Issue
Corporations
22. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Mutual Agency
Carrying Value
Adjusting entries affect...
Events that are recorded as transactions
23. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
Income Statement
Liquidity
Normal Balance
Permanent Accounts (Real Accounts)
24. 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
Going Concern
Closing Entries
Adjusting entries affect...
Long term assets are..
25. International Accounting Standards Board.
Recognition Point
Liquidity
Depreciation
IASB
26. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.
Recognition
GASB
Operating Activities
Securities Exchange Commission (SEC)
27. Working totals
Valuation
Stockholder's Equity =
Statement of Retained Earnings:
Footings
28. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
Continuity Assumption
We Recognize A Transaction
Valuation
Interim Periods
29. Revenues that a company has earned but for which no entry has been made in the accounting records
Recognition
Carrying Value
Accrued revenues
Closing Entries
30. It's usual balance and is the side (debit or credit) that increases the amount.
Normal Balance
Going Concern
Carrying Value
Periodicity
31. Choosing the number of accounting periods
Cost Principle
Continuity
Recognition
Contra Account
32. At a specific point in time (Certain Date)....Assets - Liabilities - Stockholder's equity.
Recognition Point
When expenses exceed revenues..
Events that are recorded as transactions
Balance Sheet
33. The manipulation of revenues and expenses to achieve a specific outcome.
Accumulated Depreciation Accounts
Going Concern
Contra Account
Earnings Management
34. A net loss occurs
Accrual Accounting
GASB
When expenses exceed revenues..
Stockholder's Equity
35. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Securities Exchange Commission (SEC)
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Income Statement
IASB
36. Cash account
Cash Basis of Accounting
Accrual Accounting
Adjusting entries NEVER affect..
Adjusted Trial Balance
37. Forces a monetary value to a business transaction and accounting for the assets and liabilities that result from the transaction.
Recognizing unrecorded - earned revenues
Valuation
Final Trial Balance
'Big Bath Theory'
38. Selling goods and services to customers - employing managers and workers.
Accumulated Depreciation accounts are deducted from..
Valuation
Operating Activities
Income Statement
39. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Continuity
Going Concern
Recognizing unrecorded - earned revenues
'Big Bath Theory'
40. Wages - Interest - and Income taxes that have been incurred but have not been recorded during an accounting period.
We Recognize A Transaction
Valuation Issue
Recognizing Unrecorded Expenses (RUE)
Continuity Assumption
41. Shows the changes in RE over an accounting period.
'Big Bath Theory'
Valuation Issue
Adjusting entries affect...
Statement of Retained Earnings:
42. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
Long term assets are..
Steps for Income Summary Account
Valuation Issue
Recognition Point
43. If you're having a bad year - to dump everything into something else like pensions
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44. Accounting periods of less than a year.
Board of Directors
Actuaries
Balance Sheet
Interim Periods
45. A separate account that is paired with a related account
Board of Directors
Operating Activities
Allocating recorded costs between 2 or more accounting periods (ARC)
Contra Account
46. The net amount - or 'Book Value' of an asset
Mutual Agency
Consignment Sale
Accumulated Depreciation accounts are deducted from..
Carrying Value
47. Customer buys a service - company pays an employee for service - company performs service
Periodicity
Events that are recorded as transactions
Stockholder's Equity
Corporations
48. Accounting Equation
Contra Account
Not recorded as transactions
Accounting Equation
Accrued revenues
49. The difficulty of deciding when a business transaction should be recorded
When expenses exceed revenues..
Recognition
'Big Bath Theory'
Events that are recorded as transactions
50. 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.
Post-closing trial balance
Revenues are what to SE..
Recognizing unrecorded - earned revenues
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)