Accounting Definitions Chapter 1-4

Natalie Balzert
Quiz by Natalie Balzert, updated more than 1 year ago
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Question 1

Question
What is a Dividend?
Answer
  • A distribution by a corporation to its customers.
  • A distribution by a corporation to its owners.
  • A distribution by a corporation to its stockholders.

Question 2

Question
Define financial accounting.
Answer
  • The field of accounting that provides economic and financial information for investors, creditors and other external users.
  • The field of accounting that provides economic and financial information for owners, customers and other external users.
  • The field of accounting that provides economic and financial information for the government, the general public and other external users.

Question 3

Question
What is an income statement?
Answer
  • A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.
  • A financial statement that presents the dividends and common stock and resulting net income or net loss of a company for a specific period of time.
  • A financial statement that presents the cash and dividends and resulting net income or net loss of a company for a specific period of time.

Question 4

Question
Define Ethics.
Answer
  • The standards of business by which one's actions are judged as right or wrong, honest or dishonest, fair or not fair.
  • The process by which a company is investigated by the federal reserve for suspicion of money laundering.
  • The standards of conduct by which one's actions are judged as right or wrong, honest or dishonest, fair or not fair.

Question 5

Question
What is a compound entry?
Answer
  • A journal entry that involves one or two accounts.
  • A general ledger account that is compounded on a monthly basis.
  • A journal entry that involves three or more accounts.

Question 6

Question
What is a chart of accounts?
Answer
  • A list of accounts and the definitions of those accounts.
  • A list of accounts and the account numbers that identify their location in the ledger.
  • A list of accounts displayed on a chart or graph.

Question 7

Question
Define a Journal.
Answer
  • An accounting record in which sales are initially recorded in chronological order.
  • An accounting record in which transactions are initially recorded in chronological order.
  • An accounting record in which revenues are initially recorded in chronological order.

Question 8

Question
Define Ledger.
Answer
  • The entire group of journals maintained by a company.
  • The entire group of accounts maintained by a company.
  • A sample of accounts maintained by a company.

Question 9

Question
What are retained earnings?
Answer
  • Net income that is kept (retained) in the business.
  • Net income that is converted into cash.
  • Net income that is kept (retained) in the business and distributed to the shareholders.

Question 10

Question
What is Depreciation?
Answer
  • The allocation of the cost of a liability to expense over its useful life in a rational and systematic manner.
  • The allocation of the cost of land to expense over its useful life in a rational and systematic manner.
  • The allocation of the cost of an asset to expense over its useful life in a rational and systematic manner.

Question 11

Question
Define fiscal year.
Answer
  • An accounting period that is one year in length.
  • An accounting period that is one month in length.
  • An accounting period that is six months in length.

Question 12

Question
What are Interim Periods?
Answer
  • Daily or Monthly accounting time periods.
  • Semi-annually or anual accounting time periods.
  • Monthly or quarterly accounting time periods.

Question 13

Question
Define accrual-basis accounting.
Answer
  • Accounting basis in which companies record transactions that change a company's journal entries in the periods in which the events occur.
  • Accounting basis in which companies record transactions that change a company's financial statements in the periods in which the events occur.
  • Accounting basis in which companies record transactions that change a company's net income/loss in the periods in which the events occur.

Question 14

Question
What are accrued expenses?
Answer
  • Expenses incurred but not yet paid in cash or recorded.
  • Expenses that are paid for but not yet recorded.
  • Expenses incurred that are paid for and recorded.

Question 15

Question
Accrued revenues?
Answer
  • Revenues for services performed not yet received in cash but have been recorded.
  • Revenues for services not yet performed but have received cash and recorded.
  • Revenues for services performed not yet received in cash or recorded.

Question 16

Question
What are unearned revenues?
Answer
  • Cash received before services are performed.
  • Cash not yet received before services are performed.
  • Cash not yet received but services have been performed.

Question 17

Question
Define Book Value.
Answer
  • The difference between the sale of a depreciable asset and its related accumulated depreciation.
  • The difference between the cost of a depreciable asset and its related accumulated depreciation.
  • The difference between the cost of a depreciable liability and its related accumulated depreciation.

Question 18

Question
What are prepaid expenses?
Answer
  • Expenses paid in cash before they are used or consumed.
  • Expenses paid in cash after they are used or consumed.
  • Expenses paid on credit before they are used or consumed.

Question 19

Question
What is a Classified Balance Sheet?
Answer
  • An income statement that contains standard classifications or sections.
  • A balance sheet that contains standard classifications or sections.
  • A trial balance sheet that contains standard classifications or sections.

Question 20

Question
Define Current Assets.
Answer
  • Assets that a company expects to convert to cash or use up within one year.
  • Assets that a company expects to convert to cash or use up within 3 years.
  • Assets that a company expects to convert to cash or use up within 5 years.

Question 21

Question
What are Closing Entries?
Answer
  • Entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholder's expense account, Retained Earnings.
  • Entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholder's equity account, Common Stock.
  • Entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholder's equity account, Retained Earnings.

Question 22

Question
What are Intangible Assets?
Answer
  • Non-current assets that do not have physical substance.
  • Non-current assets that have physical substance.
  • Non-current liabilities that do not have physical substance.

Question 23

Question
Define Income Summary.
Answer
  • A temporary account used in closing cash and expense accounts.
  • A temporary account used in closing revenue and expense accounts.
  • A temporary account used in closing revenue and dividend accounts.

Question 24

Question
Define Liquidity.
Answer
  • The ability of a company to pay obligations expected to be due within the next month.
  • The ability of a company to pay obligations expected to be due within the next year.
  • The ability of a company to pay obligations expected to be due within the next 3 years.

Question 25

Question
What is a worksheet?
Answer
  • A multiple-column form that may be used in making adjusting entries and in preparing and income statement.
  • A multiple-column form that may be used in making closing entries and in preparing financial statements.
  • A multiple-column form that may be used in making adjusting entries and in preparing financial statements.

Question 26

Question
What is the operating cycle?
Answer
  • The average time that it takes to purchase common stock, sell it on account , and then collect cash from shareholders.
  • The average time that it takes to purchase inventory, sell it on account , and then collect cash from customers.
  • The average time that it takes to purchase inventory and then sell it for cash.

Question 27

Question
What are long-term investments?
Answer
  • Generally, (1) investments in stocks and bonds of other companies that companies normally hold for many years, and (2) long-term assets, such as land and buildings, not currently being used in operations.
  • Generally, (1) investments in stocks and bonds of other companies that companies normally hold for many years, and (2) short-term assets, such as inventory, not currently being used in operations.
  • Generally, (1) investments in short sale stock and mutual funds of other companies that companies normally hold for a few days, and (2) long-term assets, such as land and buildings, currently being used in operations.

Question 28

Question
Define Stockholder's Equity.
Answer
  • The combination of revenue and dividend accounts. Often referred to as the ownership claim of shareholders on total assets. It is to a corporation what owner's equity is to a proprietorship.
  • The combination of asset and liability accounts. Often referred to as the ownership claim of shareholders on total assets. It is to a corporation what owner's equity is to a proprietorship.
  • The combination of common stock and retained earnings accounts. Often referred to as the ownership claim of shareholders on total assets. It is to a corporation what owner's equity is to a proprietorship.

Question 29

Question
What are Temporary (nominal) accounts?
Answer
  • Accounts that relate only to a given accounting period. Consist of all income statement accounts and the dividends account. All temporary accounts are closed at the end of the accounting period.
  • Accounts that relate only to any given accounting period. Consist of all income statement accounts and the dividends account. All temporary accounts are closed at the end of the accounting period.
  • Accounts that relate only to a given accounting period. Consist of all liability accounts and the dividends account. All temporary accounts are closed at the end of the accounting period.

Question 30

Question
What is a Reversing Entry?
Answer
  • An entry, made at the beginning of the next accounting period, that is the exact opposite of the adjusting entry made in the previous period.
  • An entry, made at the ending of the next accounting period, that is the exact opposite of the adjusting entry made in the previous period.
  • An entry, made at the beginning of the next accounting period, that is exactly the same as the adjusting entry made in the previous period.

Question 31

Question
What is a Post-Closing Trial Balance?
Answer
  • A list of permanent accounts and their balances before a company has journalized and posted closing entries.
  • A list of temporary accounts and their balances after a company has journalized and posted closing entries.
  • A list of permanent accounts and their balances after a company has journalized and posted closing entries.

Question 32

Question
What are permanent (real) accounts?
Answer
  • Accounts that do not relate to one or more accounting periods. Consist of all income statement accounts. Balances are carried forward to the next accounting period.
  • Accounts that relate to one or more accounting periods. Consist of all balance sheet accounts. Balances are carried forward to the next accounting period.
  • Accounts that relate to one or more accounting periods. Consist of all balance sheet accounts. Balances are closed before the start of the next accounting period.
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