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