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