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