Bunisess Real Sim

In a T-Account which side is the debit side

Left

What account below is not an asset

Capital Stock

The accounting equation is

Assets = Liabilities + Owner's Equity

By law which organization is required to conduct annual audits

Publicly traded corporations

In order to increase an asset account the company would

Debit the account

A CPA is a

Certified Public Accountant

In order to decrease a liability account the company would

Debit the account

The Securities Exchange Commission is a

Government agency that regulates the trading of stocks

In order to increase an equity account the company would

Credit the account

If an owner purchased a $30

000 truck for the business with cash what accounts would be debited and credited

Which of the following is not a reason for a journal entry

To record the purchase of a new home by the owner for his personal use

A journal entry is used to

Record a business transaction

Which of the following is not a component of a journal entry

The name of the person who made the entry

A journal entry must have

At least one debit and one credit

In a journal entry the sum of the debits must equal

The sum of the credits

If a company purchases inventory for $500 on credit the journal entry would be

Debit Inventory $500 and Credit Accounts Payable $500

When a company pays its employees the journal entry would be

Debit Salaries Expense and Credit Cash

If a company performs a service for a customer and receives $1

000 in cash the journal entry would be

A chronological record of all transactions is the

General Journal

The first place a transaction is recorded is the

Journal

What is a ledger

A collection of all accounts used by a business

The process of transferring information from the journal to the ledger is called

Posting

Which of the following is not a column in a general ledger account

The name of the person who made the entry

The balance of an account in the general ledger is calculated by

Subtracting the total credits from the total debits (or vice versa)

A list of all accounts and their balances is called a

Trial Balance

If a trial balance is "in balance" it means

Total debits equal total credits

The ledger provides

The current balance of each account

Accounts in the ledger are usually organized by

The chart of accounts

Which account would likely have a credit balance

Accounts Payable

Which account would likely have a debit balance

Rent Expense

Which of the following is not a step in the accounting cycle

Creating a business plan

A worksheet is used to

Help prepare financial statements

The first step in the accounting cycle is

Identifying and analyzing transactions

The purpose of adjusting entries is to

Ensure that revenues and expenses are recorded in the correct period

An income statement shows

A company's revenues and expenses over a period of time

A balance sheet shows

A company's assets liabilities and owners' equity at a specific point in time

The statement of owner's equity shows

The changes in owner's equity over a period of time

Closing entries are made to

Reset temporary accounts to zero

The post-closing trial balance includes only

Balance sheet accounts

Net income is calculated by

Subtracting total expenses from total revenue

Which of the following is not a financial statement

A worksheet

Which of the following is not a characteristic of useful financial information

Complexity

Vertical analysis involves

Comparing each item on a financial statement to a base amount

Horizontal analysis involves

Comparing financial statement items over several accounting periods

Common-size financial statements are a form of

Vertical analysis

The base amount for vertical analysis of an income statement is usually

Net Sales

The base amount for vertical analysis of a balance sheet is usually

Total Assets

Financial statement analysis is used by

Both internal and external stakeholders

Trend analysis is another name for

Horizontal analysis

To see how much a company's cash has changed compared to last year you would use

Horizontal analysis

Managerial accounting is primarily used by

Internal decision-makers

Which of the following is a product cost

Direct materials

Which of the following is a period cost

Selling expenses

Fixed costs

Remain constant in total regardless of changes in activity level

Variable costs

Change in total in direct proportion to changes in activity level

Direct labor is a

Product cost

Manufacturing overhead includes

Indirect materials and indirect labor

The cost of goods manufactured is

The total cost of all units completed during the period

Raw materials inventory includes

Goods that have not yet entered the production process

Work in process inventory includes

Goods that are partially completed

The break-even point is the point where

Total revenue equals total costs

A contribution margin is calculated by

Subtracting variable costs from sales

A budget is

A formal written plan for the future

Which of the following is not a benefit of budgeting

It guarantees a profit

The master budget includes

Both operating and financial budgets

A sales forecast is

The starting point for the master budget

The margin of safety is

The amount by which actual sales exceed break-even sales

Differential analysis is used for

Comparing the costs and benefits of different alternatives

Sunk costs are

Costs that have already been incurred and cannot be changed

Opportunity cost is

The benefit foregone by choosing one alternative over another

The debt-to-equity ratio measures

A company's financial leverage

The current ratio measures

A company's ability to pay its short-term liabilities

The inventory turnover ratio measures

How many times a company's inventory is sold and replaced

The quick ratio is also known as the

Acid-test ratio

Return on equity (ROE) measures

How much profit a company generates with the money shareholders have invested

The price-earnings (P/E) ratio measures

The market price of a share of stock relative to its earnings per share

Working capital is calculated by

Subtracting current liabilities from current assets

Profit margin measures

The percentage of each sales dollar that remains as net income

The accounts receivable turnover ratio measures

How quickly a company collects its receivables

A high current ratio generally indicates

Good short-term liquidity

Forensic accounting involves

The use of accounting skills to investigate fraud or embezzlement

Which of the following is a common sign of fraud

Unexplained changes in financial patterns

An internal control is

A process designed to provide reasonable assurance regarding the achievement of objectives

The "fraud triangle" includes

Pressure Opportunity and Rationalization

A whistleblower is

An employee who reports unethical or illegal activities

Segregation of duties is an example of

An internal control

Embezzlement is

The theft of assets by someone who is entrusted with them

Cooking the books refers to

Deliberately misstating financial statements

The primary goal of a forensic audit is

To gather evidence for legal proceedings

Identity theft is a form of

Fraud

Which document is most useful for verifying cash transactions

Bank statement

Money laundering is

The process of making "dirty" money look "clean"

A red flag for payroll fraud is

Duplicate Social Security numbers

Skimming involves

Stealing cash before it is recorded in the accounting system

Lapping is a fraud technique used to

Hide the theft of accounts receivable payments

Kickbacks are

Illegal payments made to someone in exchange for a business favor

Ghost employees are

Non-existent employees on the payroll

To prevent inventory theft companies should use

Periodic physical counts

Asset misappropriation is

The most common type of occupational fraud

External auditors are responsible for

Expressing an opinion on the fairness of financial statements