Accounting mock test flashcards FBLA

A journal is best described as:

A chronological record of business transactions

Recording transactions by date in a multi-column format is known as:

Journalizing

A credit to Accounts Payable would be used when:

Purchasing inventory on account

Cash receipts should be journalized in the:

Cash Receipts Journal

When a business receives cash from sales, the journal entry is:

Debit Cash, Credit Sales

Adjusting entries are done:

At the end of the fiscal period

The journal entry to record depreciation includes:

Debit Depreciation Expense

A credit to Cash is used when:

Paying bills

The source document for cash payments is usually a:

Check

When journalizing a return of merchandise purchased, you:

Credit Purchases Returns

Closing entries are journalized to:

Transfer balances to capital

Adjusting entries always involve:

A balance sheet and income statement account

A debit to Cash Short & Over indicates:

Cash short

The sales journal is used to record:

All credit sales

A purchase of office supplies on account is recorded in the:

Purchases Journal

Sales returns are recorded in the:

General Journal

Cash paid for rent is recorded in the:

Cash Payments Journal

A compound journal entry:

Contains more than two accounts

The first step in journalizing is to:

Write the date

Journalizing transactions affects:

Both balance sheet and income statement accounts

Accounts Receivable is classified as a(n):

Asset

Capital is classified as:

Owner’s Equity

Equipment is a:

Long-term asset

Prepaid Insurance is classified as a(n):

Asset

Wages Payable is a:

Current liability

Intangible assets include:

Copyrights

Unearned Revenue is classified as a:

Liability

Notes Payable due in 5 years is a:

Long-term liability

A chart of accounts:

Lists all accounts used in the system

Office Supplies is a(n):

Asset

Interest Revenue is a:

Revenue

Land is considered a:

Plant asset

Accrued Expenses Payable are:

Liabilities

Intangible assets do NOT include:

Supplies

Current liabilities must be paid within:

1 year

The accounting equation is:

Assets = Liabilities + Equity

The first step of the accounting cycle is:

Analyze transactions

GAAP stands for:

Generally Accepted Accounting Principles

Double-entry accounting means each transaction affects:

Two or more accounts

An asset is best defined as:

Anything owned

A liability is:

An obligation to pay

The purpose of accounting is to:

Provide financial information

The matching principle requires:

Match expenses to the revenue they generate

Revenue is recorded when:

The sale occurs

The financial statement showing performance is the:

Income Statement

A fiscal period is usually:

1 year

Going Concern assumption means:

The business will continue operating

Expenses are best defined as:

Costs of doing business

The ledger contains:

All accounts

Financial laws and regulations ensure:

Compliance and fairness

The income statement reports:

Revenues and expenses

Net income equals:

Revenues – Expenses

Gross profit equals:

Sales – Cost of Goods Sold

An income statement is prepared:

Monthly or yearly

The final line on an income statement is:

Net Income or Net Loss

Posting transfers data from:

Journal to ledger

The account identifier used during posting is the:

Account number

A trial balance is prepared to:

Prove debit = credit

Posting references connect:

Journals to ledgers

A balanced ledger means:

Total debits = total credits

The balance sheet reports:

Assets, liabilities, and equity

The accounting equation appears on the:

Balance Sheet

Accounts on the balance sheet are listed in order of:

Liquidity

Owner’s Equity increases with:

Revenues

A balance sheet shows financial position:

At a single point in time

A worksheet is used to:

Organize information for financial statements

Adjustments appear in the:

Adjustments columns

A worksheet includes:

Income statement and balance sheet sections

Errors on a worksheet should be corrected:

Immediately

The first column on a worksheet is:

Account name

A bank reconciliation compares the checkbook to the:

Bank statement

A deposit in transit is:

Recorded by business but not by bank

Outstanding checks are:

Checks written but not yet cleared

Cash short is recorded as a(n):

Expense

Bank reconciliation adjusting entries often affect:

Cash

Gross earnings are calculated using:

Salary, rate, or hours worked

FICA taxes include:

Medicare and Social Security

Net pay equals:

Gross earnings – deductions

Form W-4 is used to:

Determine withholding allowances

Payroll checks are prepared in the:

Payroll register

A partnership has:

Two or more owners

Stockholders own a:

Corporation

A disadvantage of a sole proprietorship is:

Unlimited liability

A corporation’s major disadvantage is:

Double taxation

A partnership agreement outlines:

Ownership duties and profit sharing

Straight-line depreciation spreads cost:

Evenly across useful life

Accumulated Depreciation is a:

Contra-asset

Units-of-production depreciation is based on:

Usage

Double-declining balance is a:

Accelerated method

Depreciation is recorded:

Monthly or annually