Accounting Quiz

nteresting Questions, Facts, and Information

Accounting

The length of time between financial reports is a ___________ ___________?

fiscal period . The term 'finanicial year' is used mainly in British English.

The official document sent to the government to become a corporation are the ...?
Articles of Incorporation.

If only one person owns a business this is a ...?

sole proprietorship .

The investment to get a business started is ...?

Capital.

Anything that has value is called ...?

assets.

These are economic resources with the ability or potential to provide future benefits?
Assets.

When revenue is greater than expenses, you have a ___?

Net Income.

Assets - Liabilities = ____?

Shareholder's Equity.

Which financial statement shows the results of the operating activities of a firm for a specific period of time?

Income Statement.

This statement reports the net cash flows relating to operating, investing, and financing activities for a period of time?

Statement of Cash Flows.

Which government agency has the authority to set acceptable accounting methods in the U.S.?

SEC. The SEC is the Securities Exchange Commission. The FAA is the Federal Aviation Administration, and the EEOC is the Equal Employment Opportunities Commission.

The amount of cash paid in acquiring an asset is called what?

Historical Cost.

Which is an example of an intangible asset?

Patent.

Earnings that a firm realizes in excess of dividends are called what?

Retained Earnings.

A ____ lists each of the accounts in the general ledger with its balance as of a particular date. What is it?
Trial Balance.

What is the normal balance for an expense account?

Debit. Expenses decrease the owner's capital.

The act of transferring the information from the General Journal to the General Ledger is called what?

Posting. You JOURNALIZE an entry from the source, and POST the journal entry to the ledger.

What does the accounting acronym G.A.A.P. stand for?

Generally Accepted Accounting Principles. These are the principles that govern the form and format of accounting.

The abbreviations for debit and credit (Dr. and Cr.) come from what language, and mean what?

Latin, debere and credere. Accounting has been around for a long time :)

True or False? To "debit" an account means to add to it.
f. Only if the normal balance of the account is debit. If the normal balance of the account is credit, you deduct.

What kind of balance sheet makes distinctions between current and capital assets?

Classified.

How do you get the Current Ratio? Accounting 101 - Bookkeeping

divide current assets by current liabilities. The Current Ratio tells you how well your business is able to cover its current debts (the ones payable in the next twelve months). It is generally accepted that if your business has a Current Ratio of two or more, you're doing well.

True or False? If a mistake is made in a journal entry, two correcting entries are required to fix it.
f. You can use two entries to fix it, but two are not REQUIRED. The entry can usually be fixed with one entry, or one compound entry.

When we talk about accounting, what kind of job do we mean?

All of bookkeeping, auditing, consulting, and more. (Bookkeeping and auditing., Bookkeeping and consulting., Bookkeeping only.). Bookkeeping is only a very small part of the accounting process.

Which part of the G.A.A.P. is "the assumption that economic events can be identified with a particular unit of accountability"?

Economic entity assumption. Basically, the economic entity assumption states that a corporation exists as a separate entity from its owner(s) or shareholders.

Which form of accounting states that transactions are to be recorded in the period that they occur?


Accrual basis of accounting. The other form is the cash basis of accounting, where revenue is recorded only when cash is received, and expenses are recorded only when cash is paid.

Usually, what asset account in a company's ledger is the most liquid?


cash . An account increases in liquidity the easier it is to turn into cash. This is important to know, because on a Classified Balance Sheet, current assets and current liabilities must be recorded in order of decreasing liquidity.

Which kind of accountant would you go to to have prepare your income tax documentation, public or private?

public. A public accountant opens his business to the public, whereas a private accountant works for a private company.

What does the certification CA stand for?

Chartered Accountant.

When you have yet to bill a customer for services rendered and have not received the money in the same financial period that the service was performed, then the transaction is recorded as a(n) ________ (assume accrual basis of accounting)?

accrued revenue. In the cash basis of accounting, the transaction would not be recorded until the next period, when the cash is received.
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