Test your basic knowledge |

CLEP Financial Accounting

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. When title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.






2. As an expense and the corresponding liability accumulate.






3. Separate legal entities - and the corporation can enter contracts and also be sued. Stockholder's cannot be sued.






4. Financial Accounting Standards Board - Designed by SEC to develop rules on accounting practice.






5. Society recognizes you as a partner of your partnership - so if you or they do something stupid - you are bound to that deal.






6. Unless there is evidence to the contrary - the accountant assumed that the business will continue to operate indefinitely






7. 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






8. 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.






9. Accounting periods of less than a year.






10. Focuses on assigning a monetary value to a business transaction and accounting for assets and liabilities.






11. A body of people set up by Congress who protect the public by regulating the issuing - buying - and selling of stocks in the US.






12. It's usual balance and is the side (debit or credit) that increases the amount.






13. A 12 month accounting period (Vary depending on slack seasons)






14. The predetermined time at which a transaction should be recorded.






15. Postponement of recognition of an expense already paid.






16. The ability to have enough cash to pay debts when they are due.






17. If you're having a bad year - to dump everything into something else like pensions

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18. Contributed Capital + Retained Earnings

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19. Match expenses with the revenues that they help generate - & vice versa.






20. The difficulty of deciding when a business transaction should be recorded






21. 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






22. A separate account that is paired with a related account






23. The manipulation of revenues and expenses to achieve a specific outcome.






24. A temporary account that summarizes all revenues and expenses for the period.






25. Revenues - Expenses






26. Common Stock + Retained Earnings - Dividends + Revenues - Expenses

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27. 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)






28. Deferral of an expense! (Except land)






29. Revenues that a company has earned but for which no entry has been made in the accounting records






30. Their related asset accounts on the balance sheet






31. Shows the changes in RE over an accounting period.






32. Net income on the income statement - and profitability comparisons from one accounting period to the next.






33. Sole worker of your business






34. Persuasive evidence of arrangement - Seller's price is fixed or determinable - Product or service has been delivered - Collectibility is reasonably assured






35. Choosing the number of accounting periods






36. Determines corporate policy - declares dividends and appoints management.






37. Companies present annual financial statements on the assumption that the business will continue to operate indefinitely






38. Close the revenues account - Close the expense account - Close the income summary account - Close the dividends account






39. Generally Accepted Accounting Principles - or guidelines for financial accounting.






40. Increases






41. Payments received in advance - and deposits made on goods and services






42. The practice of recording transactions at exchange price at the point of recognition.






43. Contains only balance sheet accounts.






44. Determines that all temporary accounts have zero balances and to double check that total debits = total credits






45. Decreases






46. customer inquires about availability of service -company hires new employee -company signs contract to provide service in future






47. Payments of rent - insurance - supplies - and the depreciation of plant and equipment






48. Decreases






49. A net loss occurs






50. Government Accounting Standards Board - similar to FASB - issues accounting standards for state and local governments.