Financial Accounting Fundamentals Chapter 1-4

Question 1 of 71

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What is the accounting equation?

Select one or more of the following:

  • Assets + Liabilities = Shareholder's Equity

  • Assets = Liabilities - Shareholder's Equity

  • Assets = Liabilities + Shareholder's Equity

Question 2 of 71

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Which of these is NOT one of the 5 steps in recording all accounting transactions?

Select one or more of the following:

  • Is it a business transaction? Yes or No?

  • What board type of accounts are affected?

  • What specific type of accounts are affected?

  • Which specific accounts has increased or decreased?

  • Which accounts are recorded in to journal entries?

  • Record all transactions in the Journal.

Question 3 of 71

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Which of these is NOT one of the 4 basic principles of accounting (GAAP) ?

Select one or more of the following:

  • Income principle

  • Measurement principle

  • Revenue recognition

  • Expense recognition

  • Full disclosure principle

Question 4 of 71

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What are the Rules for debits and credits?

Select one of the following:

  • Debit means right, Credit means left

  • Credit means left, Debit means left

  • Debit means left, Credit means no change

  • Debit means left, Credit means right

Question 5 of 71

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What are the 4 basic assumptions of accounting (GAAP) ?

Select one of the following:

  • Monetary assumption, Integrity assumption, Expense assumption, Business Entity assumption

  • Monetary assumption, Time period assumption, On going assumption, Business Entity assumption

  • Money assumption, Time period assumption, On going assumption, Business Enterprise assumption

  • Monetary assumption, Time travel assumption, On going assumption, Business Entity assumption

Question 6 of 71

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What are the 2 basic constraints of accounting?

Select one of the following:

  • Materiality Constrains and Cost Benefit Constraints

  • Materialistic Constraints and Cost Effective Constraints

  • Material Constraints and Cost Revenue Constraints

  • Materiality Constraints and Cost Effective Constraints

Question 7 of 71

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What is the definition of Assets?

Select one of the following:

  • Economic resource that used to have a benefit

  • Economic resource that has a future benefit

Question 8 of 71

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Define Liabilities.

Select one of the following:

  • Economic obligation that requires the use of an asset to pay it off.

  • Economic obligation that requires the shareholders to pay it off.

Question 9 of 71

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Define Equity

Select one of the following:

  • Is the excess of an asset over liabilities.

  • Is the expense of an asset over revenue.

Question 10 of 71

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What are the 5 types of accounts in all of accounting?

Select one of the following:

  • Asses, Liabilities, Shareholder's Equity, Revenue, Expense

  • Assets, Liabilities, Receivables, Equity, Revenue

  • Assets, Receivables, Shareholder's Equity, Revenue, Expense

  • Assets, Liabilities, Shareholder's Equity, Revenue, Expense

Question 11 of 71

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Define Revenue.

Select one of the following:

  • Is the amount received for selling an asset or the release (i.e. forgiveness) of debt and increases shareholder's dividends.

  • Is the amount received for selling an asset or the release (i.e. forgiveness) of debt and increases shareholder's equity.

Question 12 of 71

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Define expense.

Select one of the following:

  • Is an expired asset, which required an asset or another liability to pay it off and decreases shareholder's common stock value.

  • Is an expired asset, which required an asset or another liability to pay it off and decreases shareholder's equity.

Question 13 of 71

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Define accounting.

Select one of the following:

  • Is the process of accounting for anything of value or expense that needs to be accounted for in an accounting general ledger.

  • It is the counting of something that can be accounted for.

  • Consists of 3 basic activities. It identifies, records and hides the economic events of an organization to interested users.

  • Consists of 3 basic activities. It identifies, records and communicates the economic events of an organization to interested users.

Question 14 of 71

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What are 4 examples of accounting source documents recording all accounting transactions?

Select one of the following:

  • Bank statement, Receipt Pay Slip, A check.

  • Bank statement, Sales Invoice, Pay Slip, A check.

  • Federal statement, Sales Invoice, Pay Slip, A check.

  • Federal statement, Sales Invoice, Pay Slip, Money.

Question 15 of 71

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What is an account?

Select one of the following:

  • An account is an individual accounting record of increases and decreases in a specific asset, liability, shareholder's equity, unearned revenue and expense item.

  • An account is an individual accounting record of increases and decreases in a specific asset, liability, shareholder's equity, revenue and expense item.

  • An account is an individual accounting record of increases and decreases in a specific asset, liability, common stock and dividends, revenue and expense item.

  • An account is an individual accounting record of increases and decreases in a specific asset, liability, common stock, unearned revenue and expense item.

Question 16 of 71

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Debit always mean increase and credit always means decrease.

Select one of the following:

  • True
  • False

Question 17 of 71

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Why are accounting systems called double-entry?

Select one of the following:

  • A system that records in appropriate accounts the unique effect of each transaction.

  • A system that records in appropriate accounts the single effect of each transaction.

  • A system that records in appropriate accounts the dual effect of each transaction.

Question 18 of 71

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Monthly and quarterly time periods are called

Select one of the following:

  • calendar periods.

  • fiscal periods.

  • interim periods.

  • quarterly periods.

Question 19 of 71

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The time period assumption states that

Select one of the following:

  • a transaction can only affect one period of time.

  • estimates should not be made if a transaction affects more than one time period.

  • adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations.

  • the economic life of a business can be divided into artificial time periods.

Question 20 of 71

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An accounting time period that is one year in length, but does not begin on January 1st, is referred to as

Select one of the following:

  • a fiscal year.

  • an interim period.

  • the time period assumption.

  • a reporting period.

Question 21 of 71

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Adjustments would not be necessary if financial statements were prepared to reflect net income from

Select one of the following:

  • monthly operations.

  • fiscal year operations.

  • interim operations.

  • lifetime operations.

Question 22 of 71

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Management usually desires________________ financial statements and the IRS requires all businesses to file _______________ tax returns.

Select one of the following:

  • annual, annual

  • monthly, annual

  • quarterly, monthly

  • monthly, monthly

Question 23 of 71

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The time period assumption is also referred to as the

Select one of the following:

  • calendar assumption.

  • cyclicity assumption.

  • periodicity assumption.

  • fiscal assumption.

Question 24 of 71

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In general, the shorter the time period, the difficulty of making the proper adjustments to accounts

Select one of the following:

  • is increased.

  • is decreased.

  • is unaffected.

  • depends on if there is a profit or loss.

Question 25 of 71

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Which of the following is NOT common time period chosen by businesses as their accounting period?

Select one of the following:

  • Daily.

  • Monthly.

  • Quarterly.

  • Annually.

Question 26 of 71

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Which of the following time periods would NOT be referred to as an interim period?

Select one of the following:

  • Monthly

  • Quarterly

  • Semi-annually

  • Annually

Question 27 of 71

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The fiscal year of a business is usually determined by

Select one of the following:

  • the IRS.

  • a lottery.

  • the business.

  • the SEC.

Question 28 of 71

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Which of the following are in accordance with generally accepted accounting principles?

Select one of the following:

  • Accrual basis accounting.

  • Cash basis accounting.

  • Both accrual basis and cash basis accounting.

  • Neither accrual basis nor cash basis accounting.

Question 29 of 71

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The revenue recognition principle dictates that revenue should be recognized in the accounting period

Select one of the following:

  • in which cash is received.

  • in which the performance obligation is satisfied.

  • at the end of the month.

  • in which income taxes are paid.

Question 30 of 71

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In a service-type business, revenue is recognized

Select one of the following:

  • at the end of the month.

  • at the end of the year.

  • when the service is performed.

  • when cash is received.

Question 31 of 71

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The expense recognition principle matches

Select one of the following:

  • customers with businesses.

  • expenses with revenues.

  • assets with liabilities.

  • creditors with businesses.

Question 32 of 71

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Which one of the following is not a justification for adjusting entries?

Select one of the following:

  • Adjusting entries are necessary to ensure that the revenue recognition principle is followed.

  • Adjusting entries are necessary to ensure that the expense recognition principle is followed.

  • Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.

  • Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Question 33 of 71

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An adjusting entry

Select one of the following:

  • affects two balance sheet accounts.

  • affects two income statement accounts.

  • affects a balance sheet account and an income statement account.

  • is always a compound entry.

Question 34 of 71

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The preparation of adjusting entries is

Select one of the following:

  • straight forward because the accounts that need adjustment will be out of balance.

  • often an involved process requiring the skills of a professional.

  • only required for accounts that do not have a normal balance.

  • optional when financial statements are prepared.

Question 35 of 71

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If a resource has been consumed but a bill has not been received at the end of the accounting period, then

Select one of the following:

  • an expense should be recorded when the bill is received.

  • an expense should be recorded when the cash is paid out.

  • an adjusting entry should be made recognizing the expense.

  • is is optional whether to record the expense before the bill is received.

Question 36 of 71

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Accounts often need to be adjusted because

Select one of the following:

  • there are never enough accounts to record all the transactions.

  • many transactions affect more then one time period.

  • there are always errors made in recording transactions.

  • management can' decide what they want to report.

Question 37 of 71

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Adjusting entries are

Select one of the following:

  • not necessary if the accounting system is operating properly.

  • usually required before financial statements are prepared.

  • made whenever management desires to change an account balance.

  • made to balance sheet accounts only.

Question 38 of 71

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All of the following statements are correct except

Select one of the following:

  • adjusting entries ensure that the revenue recognition and expense recognition principles are followed.

  • a company must make adjusting entries every time is prepares financial statements.

  • adjusting entries are made to balance sheet accounts only.

  • companies often prepare adjusting entries after the balance sheet date, but date them as of the balance sheet date.

Question 39 of 71

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Accountants refer to an economic event as a

Select one of the following:

  • purchase.

  • sale.

  • transaction.

  • change in ownership.

Question 40 of 71

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The process of recording transactions has become more efficient because

Select one of the following:

  • fewer events can be quantified in financial terms.

  • computers are used in processing business events.

  • more people have been hired to record business transactions.

  • business events are recorded only at the end of the year.

Question 41 of 71

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Communication of economic events is the part of the accounting process that involves

Select one of the following:

  • identifying economic events.

  • quantifying transactions into dollars and cents.

  • preparing accounting reports.

  • recording and classifying information.

Question 42 of 71

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The use of computers in recording business events

Select one of the following:

  • has made the recording process more efficient.

  • does not use the same principles as manual accounting systems.

  • has greatly impacted the identification stage of the accounting process.

  • is economical only for large businesses.

Question 43 of 71

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Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?

Select one of the following:

  • The appointment of a new CPA firm to perform an audit.

  • The purchase of a new computer.

  • The sale of store equipment.

  • Payment of income taxes.

Question 44 of 71

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The accounting process involves all of the following except

Select one of the following:

  • identifying economic transactions that are relevant to the business.

  • communicating financial information to users by preparing financial reports.

  • recording non-quantifiable economic events.

  • analyzing and interpreting financial reports.

Question 45 of 71

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The accounting process is correctly sequenced as

Select one of the following:

  • identification, communication, recording.

  • recording, communication, identification.

  • identification, recording, communication.

  • communication, recording, identification.

Question 46 of 71

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Which of the following techniques are NOT used by accountants to interpret and report financial information?

Select one of the following:

  • Graphs.

  • Special memos for each class of external users.

  • Charts.

  • Ratios.

Question 47 of 71

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Accounting consists of three basic activities which are related to economic events of an organization. These include

Select one of the following:

  • identifying, recording and communicating.

  • identifying, calculating and responding.

  • classifying, numbering and reporting.

  • issuing, reporting and classifying.

Question 48 of 71

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All of the following statements are correct except

Select one of the following:

  • Good decision-making depends on good information.

  • A vital element in communicating economic events is the accountant's ability to analyze and interpret reported information.

  • The origins of accounting are generally attributed to Socrates, a classical Greek philosopher, who promoted accounting as a social contract.

  • The information that a user of financial information needs depends upon the kinds of decisions the user makes.

Question 49 of 71

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An account consists of

Select one of the following:

  • one part.

  • two parts.

  • three parts.

  • four parts.

Question 50 of 71

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The left side of an account is

Select one of the following:

  • blank.

  • a description of the account.

  • the debit side.

  • the balance of the account.

Question 51 of 71

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Which of the following is NOT part of an account?

Select one of the following:

  • Credit side.

  • Trial balance.

  • Debit side.

  • Title.

Question 52 of 71

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An account is a part of the financial information system and is described by all except which one of the following?

Select one of the following:

  • An account has a debit and credit side.

  • An account is a source document.

  • An account may be part of a manual or a computerized accounting system.

  • An account has a title.

Question 53 of 71

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The right side of an account

Select one of the following:

  • is the correct side.

  • reflects all transactions for the accounting period.

  • shows all the balances of the accounts in the system.

  • is the credit side.

Question 54 of 71

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An account consists of

Select one of the following:

  • a title, a debit balance and a credit balance.

  • a title, a left side and a debit balance.

  • a title, a debit side and a credit side.

  • a title, a right side and and debit balance.

Question 55 of 71

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A T-Account is

Select one of the following:

  • a way of depicting the basic form of an account.

  • what the computer uses to organize bytes of information.

  • a special account used instead of a trial balance.

  • used for accounts that have both a debit and credit balance.

Question 56 of 71

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Credits

Select one of the following:

  • decrease both assets and liabilities.

  • decrease assets and increase liabilities.

  • increase both assets and liabilities.

  • increase assets and decrease liabilities.

Question 57 of 71

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A debit to an asset account indicates

Select one of the following:

  • an error.

  • a credit was made to a liability account.

  • a decrease in the asset.

  • an increase in the asset.

Question 58 of 71

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The normal balance of any account is the

Select one of the following:

  • left side.

  • right side.

  • side which increases that account.

  • side which decreases that account.

Question 59 of 71

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The double-entry system requires that each transaction must be recorded

Select one of the following:

  • in at least two different accounts.

  • in two sets of books.

  • in a journal and in a ledger.

  • first as a revenue and then as an expense.

Question 60 of 71

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A credit is not the normal balance for which account listed below?

Select one of the following:

  • Common stock account.

  • Revenue account.

  • Liability account.

  • Dividends account.

Question 61 of 71

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Which of the following represents the expanded basic accounting equation?

Select one of the following:

  • Assets = Liabilities + Common stock + Retained Earnings + Dividends - Revenues - Expenses

  • Assets + Dividends + Expenses = Liabilities + Common Stock + Retained Earnings + Revenues

  • Assets - Liabilities - Dividends = Common Stock + Retained Earnings + Revenues - Expenses

  • Assets = Revenues + Expenses - Liabilities

Question 62 of 71

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Preparing a worksheet involves

Select one of the following:

  • two steps

  • three steps

  • four steps

  • five steps

Question 63 of 71

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The adjustments entered in the adjustments columns of a worksheet are

Select one of the following:

  • not journalized.

  • posted to the ledger but not journalized.

  • not journalized until after the financial statements are prepared.

  • journalized before the worksheet is completed.

Question 64 of 71

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The information for preparing a trial balance on a worksheet is obtained from

Select one of the following:

  • financial statements.

  • general ledger accounts.

  • general journal entries.

  • business documents.

Question 65 of 71

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After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balance shown on the

Select one of the following:

  • adjusted trial balance.

  • post-closing trial balance.

  • the general journal.

  • adjustments columns of the worksheet.

Question 66 of 71

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If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has

Select one of the following:

  • earned net income for the period.

  • an error because debits do not equal credits.

  • suffered a net loss for the period.

  • to make and adjusting entry.

Question 67 of 71

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A worksheet is a multiple column form that facilitates the

Select one of the following:

  • identification of events.

  • measurement process.

  • preparation of financial statements.

  • analysis process.

Question 68 of 71

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Which of the following companies would be least likely to use a worksheet to facilitate the adjustment process?

Select one of the following:

  • Large company with numerous accounts.

  • Small company with numerous accounts.

  • All companies, since worksheets are required under generally accepted accounting principles.

  • Small company with few accounts.

Question 69 of 71

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A worksheet can be thought of as a(n)

Select one of the following:

  • permanent accounting record.

  • optional device used by accountants.

  • part of the general ledger.

  • part of the journal.

Question 70 of 71

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The account, Supplied, will appear in the following debit columns of the worksheet.

Select one of the following:

  • Trial Balance.

  • Adjusted Trial Balance.

  • Balance Sheet.

  • All of these.

Question 71 of 71

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When constructing a worksheet, accounts are often needed that are not listed in the trial balance already entered on the worksheet from the ledger. Where should that additional accounts be shown on the worksheet?

Select one of the following:

  • They should be inserted in alphabetical order into the trial balance accounts already given.

  • They should be inserted in chart of account order into the trial balance already given.

  • They should be inserted on the lines immediately below the trial balance totals.

  • They should not be inserted on the trial balance until the next accounting period.

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Financial Accounting Fundamentals Chapter 1-4

Natalie Balzert
Quiz by , created about 2 years ago

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Natalie Balzert
Created by Natalie Balzert about 2 years ago
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