Knowledge Final Exam – The Basics

Assets are the probable economic benefits obtained or controlled by a particular entity as a result of past transactions or events.

Liabilities are the residual interest in the assets of an entity that remains after deducting its liabilities.

What is Equity?

You purchase a car for $10,000. You have put a down payment of $2,000, and financed the rest through the bank.  What are the Asset, Liability and Equity in this example?

What is the Accounting Equation?

When a business owner deposits their own money into the business, how does that affect the Accounting Equation?

If the business owner purchases equipment on account, how is the Accounting Equation affected?

If the business owner purchases equipment with cash, how is the Accounting Equation affected?

It is possible for only one side of the Accounting Equation to be affected in a transaction.

Income and expenses are included in what element of the Accounting Equation?

When a business collects revenue, how is the Accounting Equation affected?

What is true about a T account? (Select all that apply.)

What is Double-Entry accounting?

The normal balance of an asset account is a debit balance.

The normal balance of a revenue account is a debit balance.

A debit to a Liability account will decrease the account.

What is true about the Ledger? (Select all that apply.)

What is a listing of all accounts used by the business to record and classify financial transactions?

In what number series would you find Equity on the Chart of Accounts?

In what order will you find accounts listed in the Chart of Accounts and Trial Balance?

What is the two-column summary of all the debits and credits in the Chart of Accounts?

When preparing a Trial Balance, the debits will only sometimes equal the credits.

When is a Trial Balance prepared?

Which of the following are true about GAAP? (Select all that apply.)

What entity governs the Generally Accepted Accounting Principles (GAAP)?

What accounting principle forces us to use the accrual basis of accounting to match expenses with revenue?

What accounting principle requires that the business and its financial transactions remain separate and distinct from the owner’s personal financial transactions?

What accounting principle says that when given a choice on financial statements, you should choose the option that makes the business look worse?

What questions do the three main financial Statements answer? (Select all that apply.)

Which of the following are true about the Balance Sheet? (Select all that apply.)

What is the order of accounts on the Balance Sheet?

What is the Income Statement?

Net Income is the link between the Balance Sheet and the Income Statement.

The Income Statement is closed out each year along with the Balance Sheet.

The Statement of Cash Flows is divided into what categories? (Select all that apply.)

What is the Bookkeeping Cycle?

What is considered the book of original entry?

What is the transferring from journal to ledger called?

In what order do you find transactions in the Journal?

What information is included in a journal entry? (Select all that apply.)

Which of the following are examples of Special Journals? (Select all that apply.)

Only enter sales in the Sales Journal if cash is received.

What are the most common Subsidiary Ledgers? (Select all that apply.)

What are the elements of the Cash Journal? (Select all that apply.)

The person who records receipts in the cash journal should be the person who handles the cash.

What are the Bases of Accounting? (Select all that apply.)

What are best practices for securing your clients’ data? (Select all that apply.)

What is the Uniform Commercial Code (UCC)? (Select all that apply.)

Which of the following business entities does not provide legal protection for the individual’s personal property and assets?

What are the elements of a contract? (Select all that apply.)