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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. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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2. A net loss occurs
Fiscal Year
Footings
Balance Sheet
When expenses exceed revenues..
3. Customer buys a service - company pays an employee for service - company performs service
Going Concern
Earnings Management
Events that are recorded as transactions
Adjusting entries affect...
4. The amount allocated to any one accounting period.
GAAP
Final Trial Balance
Valuation
Depreciation
5. A temporary account that summarizes all revenues and expenses for the period.
Stockholder's Equity =
Normal Balance
Contra Account
Income Summary Account
6. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Depreciation
Statement of Retained Earnings:
Continuity
We Recognize A Transaction
7. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
Continuity Assumption
Long term assets are..
Recognizing unrecorded - earned revenues
Matching Rule
8. Lists all accounts and their balances
Recognizing unrecorded - earned revenues
Securities Exchange Commission (SEC)
Adjusted Trial Balance
Revenues are what to SE..
9. Working totals
Steps for Income Summary Account
Depreciation
'Big Bath Theory'
Footings
10. 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)
Stockholder's Equity
Final Trial Balance
Continuity Assumption
Consignment Sale
11. Accounting periods of less than a year.
Cost Principle
Securities Exchange Commission (SEC)
Consignment Sale
Interim Periods
12. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Not recorded as transactions
Recognition Point
'Big Bath Theory'
IASB
13. Generally Accepted Accounting Principles - or guidelines for financial accounting.
Fiscal Year
Stockholder's Equity =
Adjusting entries affect...
GAAP
14. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured
Cost Principle
Not recorded as transactions
Actuaries
SEC Requirements for transactions
15. Their related asset accounts on the balance sheet
Fiscal Year
Accumulated Depreciation accounts are deducted from..
Adjusting entries affect...
SEC Requirements for transactions
16. The manipulation of revenues and expenses to achieve a specific outcome.
Stockholder's Equity
Revenues are what to SE..
Recognition
Earnings Management
17. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
SEC Requirements for transactions
Recognizing unrecorded - earned revenues
Footings
Allocating recorded costs between 2 or more accounting periods (ARC)
18. As an expense and the corresponding liability accumulate.
Contra Account
SEC Requirements for transactions
Valuation
Accrued Expenses
19. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
Sole proprietorship
Carrying Value
Consignment Sale
Permanent Accounts (Real Accounts)
20. 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
Closing Entries
Revenues are what to SE..
Valuation Issue
Matching Rule
21. Increases
Steps for Income Summary Account
Revenues are what to SE..
Interim Periods
Periodicity
22. The difficulty of deciding when a business transaction should be recorded
Recognition
Corporations
Accrued Expenses
GAAP
23. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.
Normal Balance
GASB
We Recognize A Transaction
Recognition Point
24. If you're having a bad year - to dump everything into something else like pensions
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25. The estimation of business's net income in terms of accounting periods.
Securities Exchange Commission (SEC)
FASB
Actuaries
Periodicity
26. Decreases
Expenses are what to SE..
Balance Sheet
GASB
Adjusting entries NEVER affect..
27. A separate account that is paired with a related account
Stockholder's Equity =
Contra Account
Periodicity
Cash Basis of Accounting
28. 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
Recognition Point
Accrual Accounting
Continuity Assumption
Carrying Value
29. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Matching Rule
Securities Exchange Commission (SEC)
Dividends are what to SE
Accumulated Depreciation accounts are deducted from..
30. A 12 month accounting period (Vary depending on slack seasons)
Fiscal Year
Recognizing Unrecorded Expenses (RUE)
Consignment Sale
Normal Balance
31. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Accrued revenues
Stockholder's Equity
Expenses are what to SE..
Corporations
32. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.
Accrued revenues
Actuaries
FASB
Events that are recorded as transactions
33. 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
Final Trial Balance
Income Statement
Net Income =
Adjusted Trial Balance
34. It's usual balance and is the side (debit or credit) that increases the amount.
Carrying Value
Recognition Point
Corporations
Normal Balance
35. Contributed Capital + Retained Earnings
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36. Match expenses with the revenues that they help generate - & vice versa.
Accrual Accounting
Cost Principle
Matching Rule
Dividends are what to SE
37. Shows the changes in RE over an accounting period.
Income Statement
Stockholder's Equity
Post-closing trial balance
Statement of Retained Earnings:
38. Choosing the number of accounting periods
Accounting Equation
Accrual Accounting
Allocating recorded costs between 2 or more accounting periods (ARC)
Continuity
39. Sole worker of your business
Securities Exchange Commission (SEC)
Accrued Expenses
SEC Requirements for transactions
Sole proprietorship
40. Cash account
Adjusting entries NEVER affect..
Income Statement
Accrual Accounting
Carrying Value
41. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Liquidity
Periodicity
Post-closing trial balance
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
42. The ability to have enough cash to pay debts when they are due.
Sole proprietorship
Periodicity
Liquidity
Continuity Assumption
43. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
Steps for Income Summary Account
Liquidity
Accrued revenues
Earnings Management
44. The predetermined time at which a transaction should be recorded.
Recognition Point
Normal Balance
Operating Activities
Post-closing trial balance
45. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.
Mutual Agency
Matching Rule
Income Summary Account
Going Concern
46. Revenues - Expenses
Operating Activities
Net Income =
Matching Rule
Permanent Accounts (Real Accounts)
47. Contains only balance sheet accounts.
Accumulated Depreciation Accounts
Balance Sheet
Matching Rule
Final Trial Balance
48. Accounting Equation
Going Concern
Expenses are what to SE..
Accounting Equation
Deferral
49. The practice of recording transactions at exchange price at the point of recognition.
Cost Principle
Accrued revenues
GAAP
Adjusted Trial Balance
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.
Stockholder's Equity =
Recognizing unrecorded - earned revenues
GAAP
Accounting Equation