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DSST Principles Of Finance

Subjects : dsst, 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. A financial shortage that occurs when liabilities exceed assets or when cash inflows are less than cash outflows.






2. Accounts that reflect activities related to one or more future periods; balance sheet accounts whose balances are not closed. Also called real accounts.






3. Group that identifies preferred accounting practices and encourages global acceptance; issues the International Financial Reporting Standards.






4. Balance sheet that broadly groups assets - liabilities - and equity accounts.






5. Revenues earned in a period that both unrecorded and not yet received in cash (or other assets; adjusting entries for recording accrued revenues involve increasing assets and increasing revenues.






6. Prescribes expenses to be reported in the same period as the revenues that were earned as a result of the expenses.






7. Assets = Liabilities + Equity; Equity equals [Owner capital - owner withdrawal + revenue - expenses] for a non-corporation; Equity equals [Contributed capital - retained earnings + revenue - expenses] for a corporation where dividends are subtracted






8. Prescribes expenses to be reported in the same period as the revenues that were eared as a result of the expenses. Also called the Expense Recognition Principle.






9. Sources of information in accounting entries that can be in either paper or electronic form. Also called business papers.






10. Recurring steps performed each accounting period - starting with analyzing transactions and continuing through the post closing trial balance (or reversing entries).






11. The part of accounting that involves recording transactions and events either manually or electronically. Also called Bookkeeping.






12. Goals that are specific - measurable - attainable - realistic - and time bound.






13. Loaning or giving money to a business in orer to save it from bankruptcy.






14. Long Term assets (resources) used to produce or sell products or services. Usually lack physical form and have uncertain benefits.






15. Statements that show the effect of proposed transactions and events as if they had occurred.






16. Temporary account used only in the closing process to which the balances of revenue and expense accounts (including any gains or losses) are transferred. Its balance is transferred to the capital account (or retained earnings for a corporation).






17. A tax deferred account that allows individuals to plan for their retirement.






18. Amount earned after subtracting all expenses necessary for and matched with sales for a period.






19. List of accounts and balances prepared after period-end adjustments are recorded and posted.






20. Long term assets not used in operating activities such as notes receivable and investments in stocks and bonds.






21. Unincorporated association of two or more persons to pursue a business for profit as co-owners.






22. Account linked with another account and having an opposite normal balance. Reported as a subtraction from the other account's normal balance.






23. Ratio used to evaluate a company's ability to pay its short term obligations - calculated by dividing current assets by current liabilities.






24. Expense created by allocating the cost of plant and equipment to periods in which they are used. Represents the expense of using the asset.






25. Journal entries that affect at least three accounts.






26. Rules that specify acceptable accounting practices.






27. Financial statements covering periods of less than one year; usually based on one- - three- - or six-month periods.






28. Obligations due to be paid or settled within one year or the company's operating cycle - whichever is longer.






29. Process of transferring journal entry information to the ledger; computerized systems automate this process.






30. Accounting system that recognizes revenues when earned and expenses when incurred; the basis for GAAP.






31. An investment scam that uses the assets from new investors to make payments to older investors. Named after Charles Ponzi who used the technique in the early 1900s to defraud thousands of investors.






32. Area of accounting aimed mainly at serving external users.






33. Items paid for in advance of receiving their benefits. Classified as assets.






34. Optional entries recorded at the beginning of a period that prepare the accounts for the usual journal entries as if adjusting entries had not occurred in the prior period.






35. Owners of a corporation who usually receive dividends. Also called shareholders.






36. Record containing all accounts (with amounts) for a business.






37. Recorded on the left side; an entry that increases asset and expense accounts - and decreases liability - revenue and most equity accounts. Abbreviated Dr.






38. Activities within an organization that can affect the accounting equation.






39. Financial statement that subtracts expenses from revenues to yield a net income or loss over a specified period of time; also includes any gains or losses.






40. Expenses that remain the same regardless of the circumstances.






41. Analyses and other informal reports prepared by accountants and managers when organizing information for formal reports and financial statements.






42. Prescribes expenses to be reported in the same period as the revenues that were eared as a result of the expenses. Also called the Matching Principle.






43. The act one corporation acquiring another through the purchase of its shares - or by purchasing its assets.






44. The notion that only information with benefits of disclosure greater than the costs of disclosure need to be disclosed.






45. Outflows or using up of assets as part of operations of business to generate sales.






46. A security representing partial ownership of the company. It gives the holer priority to dividends over common stock investors. Capital stock that provides a specific dividend - which is paid before any dividends are pai to common stock holders - an






47. Business that is a separate legal entity under state or federal laws with owners called shareholders or stockholders.






48. Information and measurement system that identifies - records - and communicates relevant information about a company's business activities.






49. The principle prescribing that revenue is recognized when earned.






50. Consecutive 12-month (or 52 week) period chosen as the organization's annual accounting period.