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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. 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
Recognizing unrecorded - earned revenues
Carrying Value
Income Statement
Normal Balance
2. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.
Carrying Value
Allocating recorded costs between 2 or more accounting periods (ARC)
Accrued revenues
Corporations
3. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account
Post-closing trial balance
Consignment Sale
Steps for Income Summary Account
Adjusted Trial Balance
4. Working totals
Valuation Issue
IASB
Sole proprietorship
Footings
5. Choosing the number of accounting periods
Continuity Assumption
Adjusting entries affect...
Stockholder's Equity
Continuity
6. Used to accumulate the depreciation on each long-term asset
Board of Directors
Accumulated Depreciation Accounts
Sole proprietorship
Going Concern
7. Accounting periods of less than a year.
Mutual Agency
Interim Periods
Post-closing trial balance
Permanent Accounts (Real Accounts)
8. Selling goods and services to customers - employing managers and workers.
Stockholder's Equity =
SEC Requirements for transactions
Matching Rule
Operating Activities
9. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely
Securities Exchange Commission (SEC)
We Recognize A Transaction
Revenues are what to SE..
Going Concern
10. A net loss occurs
Going Concern
Accumulated Depreciation Accounts
Steps for Income Summary Account
When expenses exceed revenues..
11. Decreases
Stockholder's Equity
GAAP
Dividends are what to SE
Accrued Expenses
12. Customer buys a service - company pays an employee for service - company performs service
Valuation
Events that are recorded as transactions
Carrying Value
Going Concern
13. International Accounting Standards Board.
Recognition Point
Recognizing Unrecorded Expenses (RUE)
Consignment Sale
IASB
14. Focuses on assigning a monetary value to a business transaction and accounting for assets and liabilities.
GASB
Stockholder's Equity
Accrued revenues
Valuation Issue
15. A temporary account that summarizes all revenues and expenses for the period.
Carrying Value
Continuity Assumption
Income Summary Account
Not recorded as transactions
16. Decreases
Expenses are what to SE..
Cost Principle
Accumulated Depreciation accounts are deducted from..
Corporations
17. The predetermined time at which a transaction should be recorded.
Recognition Point
Stockholder's Equity =
Securities Exchange Commission (SEC)
Adjusted Trial Balance
18. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future
Not recorded as transactions
Continuity
Recognizing unrecorded - earned revenues
Cash Basis of Accounting
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)
Consignment Sale
Recognizing Unrecorded Expenses (RUE)
Operating Activities
Dividends are what to SE
20. Balance sheet accounts - such as cash and accounts payable because they carry their end-of-period balances into the next accounting period
Permanent Accounts (Real Accounts)
Periodicity
GAAP
Allocating recorded costs between 2 or more accounting periods (ARC)
21. Accounting Equation
Recognition Point
Accounting Equation
Liquidity
Periodicity
22. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.
GASB
Securities Exchange Commission (SEC)
Accrued Expenses
Fiscal Year
23. Increases
Stockholder's Equity =
Adjusting entries affect...
IASB
Revenues are what to SE..
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
Continuity
GAAP
Closing Entries
Income Statement
25. Generally Accepted Accounting Principles - or guidelines for financial accounting.
Footings
GAAP
Allocating recorded costs between 2 or more accounting periods (ARC)
Cash Basis of Accounting
26. 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
Balance Sheet
Valuation
Depreciation
27. Match expenses with the revenues that they help generate - & vice versa.
Matching Rule
GAAP
Balance Sheet
Cash Basis of Accounting
28. Contains only balance sheet accounts.
Recognizing unrecorded - earned revenues
Adjusted Trial Balance
Final Trial Balance
Operating Activities
29. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely
Closing Entries
Going Concern
Continuity Assumption
GAAP
30. Payments received in advance - and deposits made on goods and services
Closing Entries
'Big Bath Theory'
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Net Income =
31. Common Stock + Retained Earnings - Dividends + Revenues - Expenses
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32. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.
Actuaries
Board of Directors
FASB
Statement of Retained Earnings:
33. People that estimate various things
Going Concern
Footings
Actuaries
IASB
34. Revenues - Expenses
Net Income =
Recognizing Unrecorded Expenses (RUE)
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Cost Principle
35. Contributed Capital + Retained Earnings
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36. Sole worker of your business
Sole proprietorship
Going Concern
Recognition
Continuity
37. The net amount - or 'Book Value' of an asset
Continuity
Board of Directors
Carrying Value
Adjusting entries NEVER affect..
38. Postponement of recognition of an expense already paid.
Deferral
Recognizing unrecorded - earned revenues
Stockholder's Equity =
Adjusting entries affect...
39. A separate account that is paired with a related account
Continuity
Closing Entries
Contra Account
FASB
40. The ability to have enough cash to pay debts when they are due.
Liquidity
Accrued Expenses
Cash Basis of Accounting
Accounting Equation
41. Determines that all temporary accounts have zero balances and to double check that total debits = total credits
Board of Directors
Balance Sheet
SEC Requirements for transactions
Post-closing trial balance
42. Lists all accounts and their balances
Net Income =
Adjusted Trial Balance
Statement of Retained Earnings:
Accrued revenues
43. 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.
Post-closing trial balance
Closing Entries
Mutual Agency
Cash Basis of Accounting
44. 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
Mutual Agency
Allocating recorded - unearned revenues between 2 or more accounting periods (ARUR)
Recognition Point
45. The estimation of business's net income in terms of accounting periods.
Accumulated Depreciation Accounts
Periodicity
Footings
Sole proprietorship
46. The practice of recording transactions at exchange price at the point of recognition.
Steps for Income Summary Account
Cost Principle
Balance Sheet
Cash Basis of Accounting
47. The manipulation of revenues and expenses to achieve a specific outcome.
Actuaries
Revenues are what to SE..
Footings
Earnings Management
48. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.
We Recognize A Transaction
Steps for Income Summary Account
Closing Entries
Stockholder's Equity
49. Payments of rent - insurance - supplies - and the depreciation of plant and equipment
GAAP
Allocating recorded costs between 2 or more accounting periods (ARC)
Carrying Value
Earnings Management
50. Determines corporate policy - declares dividends and appoints management.
Mutual Agency
Board of Directors
Net Income =
Events that are recorded as transactions