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