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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. 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
Recognizing unrecorded - earned revenues
Continuity
Closing Entries
Cost Principle
2. Choosing the number of accounting periods
IASB
Continuity
Continuity Assumption
Operating Activities
3. Revenues - Expenses
Net Income =
Board of Directors
Continuity Assumption
Statement of Retained Earnings:
4. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
Steps for Income Summary Account
GAAP
Valuation
Accumulated Depreciation accounts are deducted from..
5. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Cost Principle
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Accumulated Depreciation accounts are deducted from..
Post-closing trial balance
6. People that estimate various things
Stockholder's Equity
Securities Exchange Commission (SEC)
Actuaries
GAAP
7. A net loss occurs
Carrying Value
Periodicity
Valuation
When expenses exceed revenues..
8. 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
Earnings Management
Recognition Point
Balance Sheet
9. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Permanent Accounts (Real Accounts)
SEC Requirements for transactions
We Recognize A Transaction
10. The practice of recording transactions at exchange price at the point of recognition.
Cost Principle
Corporations
Accumulated Depreciation accounts are deducted from..
Statement of Retained Earnings:
11. Determines corporate policy - declares dividends and appoints management.
Board of Directors
Accrued Expenses
Dividends are what to SE
Post-closing trial balance
12. Revenues that a company has earned but for which no entry has been made in the accounting records
Mutual Agency
Actuaries
Recognizing unrecorded - earned revenues
Accrued revenues
13. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.
Contra Account
Balance Sheet
GASB
SEC Requirements for transactions
14. Shows the changes in RE over an accounting period.
Not recorded as transactions
Accrued Expenses
Closing Entries
Statement of Retained Earnings:
15. Increases
Revenues are what to SE..
Depreciation
Stockholder's Equity
Statement of Retained Earnings:
16. Cash account
Adjusting entries NEVER affect..
Balance Sheet
Final Trial Balance
'Big Bath Theory'
17. The ability to have enough cash to pay debts when they are due.
Adjusting entries NEVER affect..
Mutual Agency
Liquidity
Board of Directors
18. Customer buys a service - company pays an employee for service - company performs service
Consignment Sale
Events that are recorded as transactions
Stockholder's Equity
Accumulated Depreciation Accounts
19. A temporary account that summarizes all revenues and expenses for the period.
Income Summary Account
Sole proprietorship
Adjusting entries affect...
Income Statement
20. The estimation of business's net income in terms of accounting periods.
Periodicity
Revenues are what to SE..
Sole proprietorship
GAAP
21. Decreases
SEC Requirements for transactions
Revenues are what to SE..
Dividends are what to SE
Normal Balance
22. A 12 month accounting period (Vary depending on slack seasons)
Recognizing Unrecorded Expenses (RUE)
Final Trial Balance
Fiscal Year
When expenses exceed revenues..
23. 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
Stockholder's Equity =
Statement of Retained Earnings:
Normal Balance
24. The amount allocated to any one accounting period.
Earnings Management
Depreciation
Operating Activities
Normal Balance
25. Lists all accounts and their balances
Not recorded as transactions
Adjusting entries NEVER affect..
FASB
Adjusted Trial Balance
26. If you're having a bad year - to dump everything into something else like pensions
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27. 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
Liquidity
Matching Rule
Income Statement
28. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Normal Balance
Securities Exchange Commission (SEC)
Not recorded as transactions
Corporations
29. Match expenses with the revenues that they help generate - & vice versa.
Matching Rule
Periodicity
Recognition Point
Continuity
30. Net income on the income statement - and profitability comparisons from one accounting period to the next.
Income Summary Account
FASB
Adjusting entries affect...
Corporations
31. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Accrued Expenses
Recognition
When expenses exceed revenues..
Going Concern
32. 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)
Board of Directors
Consignment Sale
Income Summary Account
Contra Account
33. The net amount - or 'Book Value' of an asset
Accumulated Depreciation Accounts
Stockholder's Equity
Carrying Value
Deferral
34. Payments received in advance - and deposits made on goods and services
Valuation
Adjusted Trial Balance
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Permanent Accounts (Real Accounts)
35. Contributed Capital + Retained Earnings
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36. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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37. Sole worker of your business
Continuity
Board of Directors
Sole proprietorship
Allocating recorded costs between 2 or more accounting periods (ARC)
38. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.
FASB
Securities Exchange Commission (SEC)
Stockholder's Equity
Cost Principle
39. The difficulty of deciding when a business transaction should be recorded
Allocating recorded costs between 2 or more accounting periods (ARC)
Accounting Equation
Recognition
Interim Periods
40. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
Allocating recorded costs between 2 or more accounting periods (ARC)
Continuity
Accrued revenues
We Recognize A Transaction
41. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
Dividends are what to SE
Securities Exchange Commission (SEC)
GASB
Cost Principle
42. Used to accumulate the depreciation on each long-term asset
Stockholder's Equity
Accumulated Depreciation Accounts
Expenses are what to SE..
Cost Principle
43. International Accounting Standards Board.
Accumulated Depreciation Accounts
Final Trial Balance
IASB
Valuation
44. Their related asset accounts on the balance sheet
We Recognize A Transaction
Accrual Accounting
Final Trial Balance
Accumulated Depreciation accounts are deducted from..
45. Generally Accepted Accounting Principles - or guidelines for financial accounting.
IASB
GAAP
Recognition Point
Earnings Management
46. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured
Interim Periods
Adjusted Trial Balance
SEC Requirements for transactions
Stockholder's Equity =
47. Wages - Interest - and Income taxes that have been incurred but have not been recorded during an accounting period.
Not recorded as transactions
Recognizing Unrecorded Expenses (RUE)
Adjusted Trial Balance
Post-closing trial balance
48. The predetermined time at which a transaction should be recorded.
Dividends are what to SE
Balance Sheet
Recognition Point
Accounting Equation
49. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
Consignment Sale
Final Trial Balance
Carrying Value
We Recognize A Transaction
50. Contains only balance sheet accounts.
Events that are recorded as transactions
Permanent Accounts (Real Accounts)
Stockholder's Equity =
Final Trial Balance