Term
Which of the following is an Asset?
1. Cash
2. Accounts Payable
3. Retained Earnings
4. Cost of Goods Sold |
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Definition
"Cash" is the correct answer.
Accounts Payable is a Liability.
Retained Earnings is a component of Stockholders' Equity
Cost of Goods Sold is an Expense account. |
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Term
True or False:
Dividends, Expenses, and Assets all increase with "Debit" activities. |
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Definition
True is the correct answer.
Dividends, Expenses, and Assets all increase with "Debit" activities. |
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Term
True or False:
"Debit" entries to any General Ledger accounts ALWAYS result in an increase to that account's value. |
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Definition
False is the correct answer.
Whether a "Debit" activity increases or decreases that account will depend on the TYPE of GL account. For example, Debits to an Asset account (ex. Office Supplies) will increase its value. However, Debits to a Liability account (ex. Accounts Payable) will decrease its value. |
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Term
Which of these are on the Income Statement?
1. Assets
2. Expenses
3. Liabilities
4. Retained Earnings
5. Revenue
6. Stock (Common, Preferred, Treasury) |
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Definition
| Only Revenues & Expenses appear on the Income Statement. |
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Term
Which of the following is NOT on the Balance Sheet?
1. Assets
2. Contra-Assets
3. Expenses
4. Liabilities
5. Retained Earnings
6. Stock (Common, Preferred, Treasury) |
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Definition
Expenses are NOT on the Balance Sheet.
Expenses are temporary accounts that are closed at the end of each accounting cycle and appear on the Income Statement.
All of the other options (Assets, ContraAssets, Liabilities, Retained Earnings, and Stocks) were permanent accounts that do appear on the Balance Sheet. |
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Term
True or False:
Both the Income Statement and the Balance Sheet contain information that represents efforts made throughout the accounting period. |
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Definition
False is the correct answer.
Only the Income Statement contains information about events throughout the accounting period-- such as Revenues earned during the first quarter of the fiscal year, or the total Wage Expenses for a given month.
Balance Sheets are a "moment in time" snap shot. Account balances were different the day before, and will change again the next day as you post more business activities. |
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Term
Which of the following is the correct 3rd row for a March Income Statement's heading?
#1. For March 2014
#2. For the Month Ended March 31, 2014
#3. 31-MARCH-2014
#4. March 31, 2014
#5. As of March 31, 2014 |
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Definition
The correct 3rd row for a March Income Statement's heading is:
#2. For the Month Ended March 31, 2014
Income Statement headings specify a "period of time"! |
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Term
Which of the following is the correct 3rd row for a March Balance Sheet's heading?
#1. For March 2014
#2. For the Month Ended March 31, 2014
#3. 31-MARCH-2014
#4. March 31, 2014
#5. As of March 31, 2014 |
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Definition
The correct 3rd row for a March Balance Sheet's heading is:
#4. March 31, 2014
Balance Sheet headings specify a "point in time"! |
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Term
Which of the following is NOT a current asset?
1. Supplies
2. Land
3. Accounts Receivable
4. Cash
5. Merchandise Inventory |
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Definition
Land is not a current asset. It is a long term asset.
All of the other accounts listed are current assets. |
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Term
Which of the following is NOT a current liability?
1. Accounts Payable
2. Wages Payable
3. Bonds Payable
4. Dividends Payable
5. Client Deposits (i.e., unearned revenue) |
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Definition
Bonds Payable is not a current liability. It is a long term liability.
All of the other accounts listed are current liabilities and, as such, would be expected to be paid out or come due within the upcoming 12 months. |
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Term
According to GAAP, which of the following is ALWAYS the 1st row in the heading of every Financial Statement?
a. Name of the Financial Statement
b. Name of the Person who prepared it
c. Date or Time Frame
d. Name of the Company |
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Definition
| Name of the Company is always the 1st row in the heading of the Financial Statement. |
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Term
According to GAAP, which of the following is ALWAYS the 2nd row in the heading of every Financial Statement?
a. Name of the Financial Statement
b. Name of the Person who prepared it
c. Date or Time Frame
d. Name of the Company |
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Definition
| Name of the Financial Statement is always the 2nd row in the heading of the Financial Statement. |
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Term
According to GAAP, which of the following is ALWAYS the 3rd row in the heading of every Financial Statement?
a. Name of the Financial Statement
b. Name of the Person who prepared it
c. Date or Time Frame
d. Name of the Company |
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Definition
| Date or Time Frame is always the 3rd row in the heading of the Financial Statement. |
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Term
Which of the following is the Contra-Asset account used to offset Fixed Assets-- such as Equipment, Vehicles, and Furniture?
a. Accumulated Depletion
b. Accumulated Depreciation
c. Allowance for Doubtful Accounts -or-
Allowance for Bad Debt
d. None. It does not use a Contra Account. |
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Definition
| Accumulated Depreciation is the Contra-Asset account that offsets Fixed Assets. |
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Term
Which of the following is the Contra-Asset account used to offset Accounts Receivable?
a. Accumulated Depletion
b. Accumulated Depreciation
c. Allowance for Doubtful Accounts -or-
Allowance for Bad Debt
d. None. It does not use a Contra Account. |
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Definition
| Allowance for Doubtful Accounts -or- Allowance for Bad Debt is the Contra-Asset account that offsets Accounts Receivable. |
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Term
Which of the following is NOT a manufacturing company?
1. PepsiCo
2. Ford Motor Company
3. Nike
4. The Walt Disney Company
5. General Mills
6. All of these are manufacturing companies. |
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Definition
The Walt Disney Company is not a manufacturing company.
It is in the Service Industry. |
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Term
Which of the following is NOT a retail company?
1. Wal-Mart
2. Hilton Hotels & Resorts
3. Bass Pro Shop
4. Whole Foods Market
5. Macy's Department Store
6. All of these are retail companies. |
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Definition
Hilton Hotels & Resorts is not a retail company.
It is in the Service Industry. |
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Term
Which of the following is NOT a service company/ organization?
1. Bank of America
2. AMC Movie Theaters
3. Burger King
4. Carnival Cruise Lines
5. Shriners Hospitals for Children
6. All of these are in a type of service industry. |
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Definition
All of those companies/organizations were in some type of Service Industry.
Common service-related industries include:
* Communications Services Industry
* Financial Services Industry
* Food Services Industry
* Health Care Services Industry
* Travel & Entertainment Industry |
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Term
Which of the following is the Contra-Asset account used to offset the rights to harvest/extract Natural Resources-- such as timber, gas, oil, and minerals?
a. Accumulated Depletion
b. Accumulated Depreciation
c. Allowance for Doubtful Accounts -or-
Allowance for Bad Debt
d. None. It does not use a Contra Account. |
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Definition
| Accumulated Depletion is the Contra-Asset account that offsets the rights to harvest/extract Natural Resources-- such as timber, gas, oil, and minerals. |
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Term
True or False:
Every company's fiscal year must end on December 31st. |
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Definition
FALSE. Companies can end their fiscal year on any calendar date. Most companies, though, do follow the traditional calendar cycle of January 1st - December 31st.
Companies can, however, set their fiscal year to mirror operations. For example, a manufacturer may end when inventories are lowest and easiest/ least expensive to assess. A company that derives significant portions of its revenue from government contracts may choose to adopt the same cycle as that agency (States and Counties end on June 30th; Federal Government ends September 30th). |
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Term
True or False:
"Shift in Assets" takes place when you give-up one type of asset and replace it with another type of asset. Total of all assets, however, remains unchanged. |
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Definition
True!
Shifts in Assets take place all the time. For example, if you purchase Office Supplies and pay Cash... you have given-up some of your Cash asset in order to acquire the Office Supplies asset.
Another example is when your customers pay their invoice. Your Cash asset increases when payments arrive, but your Accounts Receivable asset has gone down. |
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Term
True or False:
"Shift in Liabilities" takes place when you give-up one type of liability and replace it with another type of liability. Total of all liabilities, however, remains unchanged. |
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Definition
True!
Shifts in Liabilities take place whenever companies restructure their debts.
For example, you have a $10,000 Accounts Payable invoice due at the end of the month but want to postpone payment. Your vendor agrees to a 180 day note at 7% interest. As a result of this event, your Notes Payable liabilities will increase and your Accounts Payable liabilities will decrease. |
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