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204 True/False questions

  1. Horizontal analysis20. Used when a company compares its current results with those from a previous year.

          

  2. Accrual basis accounting10. The system in which income is recognized when earned and expenses are recognized when incurred.

          

  3. Normal balance19. Corporate shares with no dollar amount written on the stock certificate.

          

  4. Goodwill6. The right side of T-accounts. This increases liabilities and equity and income accounts, but decrease assets.

          

  5. Capitalized3. An income account that explains the increase in business assets as a result of selling goods.

          

  6. Capital assets10. Assets that have a life longer than one year.

          

  7. Stated value15. The esimated amount recieved for an asset at the end of its useful life. Also called salvage value and residual value.

          

  8. Face amount17. A promise by a business to pay for future expenses of a product sold.

          

  9. Maturity value11. The future value of a note.

          

  10. Corporation19. An artificial "person" created by the laws of a state that has the right to do business.

          

  11. Liquid2. The easier it is to change an asset into cash, the more ______ that asset is.

          

  12. Discount18. When lenders pay less for a bond than the face amount, the difference between what the lenders pay and the face amount is the discount.

          

  13. Plant assets14. Assets that have a life longer than one year. Also capital and fixed assets.

          

  14. Proceeds of a note11. The amount a bank gives in exchange for a note.

          

  15. Interest-bearing noteA note with an interest rate written on the face, whose face amount is the present value.

          

  16. Interest payable19. An accounting value, the equivalent to par value, given to stock with no par value written on the stock certificate.

          

  17. Purchases account18. The amount written on the face of a bond that represents the lump sum payment the borrowing corporation promises to pay on the maturity date.

          

  18. Premium18. The amount that lenders pay for a bond in excess of the face amount.

          

  19. Future value of a note11. The amount borrowed plus the interest up to the maturity date.

          

  20. Contra-purchases account10. The account that shows the total of all the individual records in the subsidiary record.

          

  21. Petty cash system20. The number shown represents income or loss after a reduction for income taxes.

          

  22. Cumulative effect of a change in accounting method20. A single number on an income statement, net of tax, which shows the total effect of a change in accounting method as if the method had been used since day one fof the business.

          

  23. Financial accounting10. The system in which income and expenses are recognized when cash changes hands. This does not meet GAAP.

          

  24. 12. Cost of goods sold12. The cost paid for the merchandise sold.

          

  25. Amortization schedule17. A schedule showing the principal, interest, and remaining balance for each payment on a loan.

          

  26. Contra accounts6. Sister accounts that have a normal balance the opposite of their brother account. These accounts are reported under their brother account and have the effect of lowering their brother account.

          

  27. Current assets10. Assets that are available to spend within a year.

          

  28. No-par stock19. They type of stock that represens the basic ownership of a corporation.

          

  29. Fixed assets10. Assets that are expected to last longer than one year.

          

  30. Accelerated depreciation methiod3. The contra-asset account that accumulates all the depreciation of long-lived assets over the years.

          

  31. Purchase method for supplies13. The method of accounting for operating supplies that recognizes supplies as an expense when they are purchased. When supplies are purchased, the debits are stored in supplies expense. The supplies inventory is not touched until the end of the year.

          

  32. Stock split19. A large distribution (2-for-1) of new stock in which stockholders turn in old certificates and receive new stock certificates.

          

  33. Cash dividend19. A share of the profits distributed to stockholders in the form of cash.

          

  34. Gross margin19. A large distribution (2-for-1) of new stock in which stockholders turn in old certificates and receive new stock certificates.

          

  35. Deferred credit/Deferred revenue18. A section of the liability section fo the balance sheet. These liabilities result from receiving cash before earning it.

          

  36. Present value of a note15. The esimated amount recieved for an asset at the end of its useful life. Also called salvage value and scrap value.

          

  37. Depletion expense16. The amount of a natural resource used up during the period.

          

  38. Outstanding shares19. The method of splitting partnership profits after making guaranteed payments.

          

  39. FIFO12. The inventory system that assumes the oldest items in inventory are the first ones sold.

          

  40. Fixed assets14. Assets that have a life longer than one year. Also capital and plant assets.

          

  41. Preemptive right19. The right to buy a portion of each new issuance of stock in order to maintain the same ownership percentage.

          

  42. Subsidiary record12. The inventory system that keeps track of the actual historic cost of each inventory item. When that item is sold, the cost flows into cost of goods sold.

          

  43. Short-term investments18. The rate that most lenders can immediately get for ther money

          

  44. AICPA8. American Institue of Certified Public Accountants. Accounting's professional organization that issues the code of ethics for accountants.

          

  45. Non-interest-bearing-note6. All accounts normally keep balances that are either debits or credits.

          

  46. Contra account3. An account that gets subtracted from an asset account.

          

  47. Expensed3. Accounts that explain why assets went down from operations.

          

  48. Internal controls8. Business procedures that make it difficult to get away with wrong behavior.

          

  49. Discontinued operations20. If a business segment has discontinued or been sold, all the associated income, expenses, gains, and losses are combined, net of tax, and reported as a single number on the income statement.

          

  50. Franchises and licenses20. A section on the income statement showing gains from the normal process of selling assets and investments

          

  51. Date of record4. The method of calculating cash flow from operations that does not start with net income, but does show cash-in and cash-out categories.

          

  52. Marketable securities9. Securities (pieces of paper that represent ownership in investments such as stocks, bonds, etc.) that are traded on public exchanges, such as the New York Stock Exchange.

          

  53. Contra-liability account6. Accounts that get closed (brought to zero) at the end of each year. These accounts are income, expenses, withdrawal, and dividends.

          

  54. Patents3. An income account that explains the increase in business assets as a result of selling goods.

          

  55. Control account10. The account that shows the total of all the individual records in the subsidiary record.

          

  56. Preferred stock19. Stock in a corporation with certain special privileges.

          

  57. Certified public accountants (CPAs)5. Accountants licensed by the state as professional independent verifiers of business financial statements.

          

  58. Intangeible assets16. Assets with no physical form, yet they offer value to a business for more than one year.

          

  59. Percentage Analysis3. A financial statement analysis technique in which one number is assigned as 100% and all other numbers are expressed as a percentage of the first number. In balance sheets, the key number is total assets. In income statements, the key number is sales.

          

  60. Interest payment dates18. The dates (usually semiannual or quarterly) each year on which the borrowing corporation promises to make the perodic cash payments.

          

  61. Extraordinary gains and losses2. Debts that must be paid within one year or one operating cycle, whichever is longer.

          

  62. Depreciation expense16. The amount of an intangible asset used up during the period.

          

  63. Reversing entries17. Entries made on the first day of a new period taht switch the debits and credits of the adjusting entries made on the last day of the previous period.

          

  64. Guaranteed payment19. An accounting value, the equivalent to par value, given to stock with no par value written on the stock certificate.

          

  65. Auditors2. Economic resources that the business plans to use in the future to make money.

          

  66. Current assets10. Assets that have a life longer than one year.

          

  67. Net of tax2. Assets that help a business or a person make money.

          

  68. Weighted average17. The account that reflects wages earned as of the end of the period but not yet paid.

          

  69. Common stock19. They type of stock that represens the basic ownership of a corporation.

          

  70. Vertical journal entries17. Entries made on the first day of a new period taht switch the debits and credits of the adjusting entries made on the last day of the previous period.

          

  71. Closely held corporation20. A corporation with few (Usually less than 10) stockholdrs.

          

  72. Face interest11. The interest rate written on the face of a note.

          

  73. Unrealized gain/loss9. A gain or loss that happens when an asset is sold.

          

  74. Payee9. The person to whom a check is written.

          

  75. Generally accepted accounting principles (GAAP)5. The rules of accounting that everyone must follow.

          

  76. Fully depreciated3. The contra-asset account that accumulates all the depreciation of long-lived assets over the years.

          

  77. Maker9. The person who writes a check.

          

  78. Discount a note10. Assets that are available to spend within a year.

          

  79. Maturity date2. Assets that help a business or a person make money.

          

  80. Trading investments19. The method of splitting partnership profits after making guaranteed payments.

          

  81. Prepaids13. Assets that represent expenses paid in advance that provide future benefits to the business.

          

  82. Face (of a bond)18. The percentage written on the face of a bond used to calculate the periodic cash payment.

          

  83. Creditors8. Standards that define how to act in business situations.

          

  84. Post-closing trial balance6. A trial balance prepared after the books have been closed at the end of the year.

          

  85. Underwriter18. A company with plenty of cash that buys an entire offering of bonds with the hope of reselling them for a profit.

          

  86. Accumulated depreciation15. An asset is said to be fully depreciated when its book value equals its salvage value.

          

  87. Transportation expense3. The cost of business airplane fares, trains, and long-distance buses.

          

  88. Capitalized2. Assets that help a business or a person make money.

          

  89. Miscellaneous expense16. The amount of a natural resource used up during the period.

          

  90. Chart of accounts3. The official list of all business accounts.

          

  91. Face rate18. The percentage written on the face of a bond used to calculate the periodic cash payment.

          

  92. Financing4. The process of finding money for the business from sources other than normal operations.

          

  93. General journal7. The book or subroutine that can be used to record any type of accountying entry.

          

  94. Bonded16. Intangible asset - The extra cost a business pays for another business for being unusually profitable.

          

  95. Account3. A place on the financial books to keep track of financial information that the owner wants to know.

          

  96. Depreciale cost4. The method of calculating cash flow from operations that does not start with net income, but does show cash-in and cash-out categories.

          

  97. Issued shares19. Maximum shares that a corporation may legally issue.

          

  98. Scrap value15. The esimated amount recieved for an asset at the end of its useful life. Also called salvage value and scrap value.

          

  99. Market interest rate11. The interest rate written on the face of a note.

          

  100. Debit3. Money that the owner takes from the busines, or money in the business account that the owner spends on personal bills. Also known as Withdrawal.

          

  101. Interim financial statements6. Financial reports for any period less than one year.

          

  102. Stock certificate19. A document evidencing ownership in a corporation.

          

  103. Audit5. The check of business accounting records in order to give an opinion on whether the financial statements present teh business fairly.

          

  104. Contra-asset account3. An account that gets subtracted from an asset account.

          

  105. Purchases returns and allowances12. A contra-purchases account used under the periodic inventory method to keep track of refunds a business gets for returning merchandise to vendors, or reductions in price (allowances) the vendors offer to resolved complaints.

          

  106. Direct write-off method19. Usually a week or two after the declaration date. Whoever owns corporate stock on the date of record gets the dividend.

          

  107. Travel expense3. The cost of living while away from home on business.

          

  108. Assets15. Modified Accelerated Cost Recovery System, for which IRS tables tell the rate by which to multiply an asset's historical cost.

          

  109. Capital6. The left side of T-accounts. This increase assets, withdrawal and expense accounts, but decrease liabilities and equity.

          

  110. Purchases discount account12. A contra-purchases account used under the periodic inventory method to keep track of discounts granted by vendors for paying early.

          

  111. Depreciation schedule15. A list of all fixed assets in the company, their purhase dates, their depreciation methods, and their depreciation each year.

          

  112. Non-operating9. Expenses or revenues come from transactions that are not part of normal business operations.

          

  113. Benchmarking6. End-of-year posting to bring the emporary accounts to zero and transfer their balances into the owner's equity account.

          

  114. Perpetual inventory method12. The inventory method that increases the inventory account with every purchase and lowers the inventory account with every sale.

          

  115. Sales11. The person who borrows money and writes a note promising to pay in the future.

          

  116. Depreciated out15. A list of all fixed assets in the company, their purhase dates, their depreciation methods, and their depreciation each year.

          

  117. Trial balance15. The esimated amount recieved for an asset at the end of its useful life. Also called salvage value and scrap value.

          

  118. Authorized shares5. Certified public accountants wh audit accounting records.

          

  119. Vertical analysis20. Used when a company compares all the numbers of a financial report with a key number from the report.

          

  120. Net3. A word that means a subtraction has occurred.

          

  121. Specialized journal7. A book or computer subroutine that is designed for quick input of a frequent type of business transaction.

          

  122. Net income3. Income - Expenses =

          

  123. Warranties payable17. An account that shows the estimated amount owed on the warranties a business offers.

          

  124. Statement of owner's equity3. A financial statement that calculates an end-of-period balance of the owner's equity account.

          

  125. Inventory3. A supply of items a business has on hand.

          

  126. Current liabilities2. Debts that must be paid within one year or one operating cycle, whichever is longer.

          

  127. Withdrawal3. Money that the owner takes from the busines, or money in the business account that the owner spends on personal bills. Also known as Draw.

          

  128. Realized gain/loss19. The equity account in a corporation that contains all the earnings the corporation has ever earned but not yet distributed to stockholders.

          

  129. Cash basis accounting5. The skill of providing financial information to run a large business.

          

  130. Copyrights19. An artificial "person" created by the laws of a state that has the right to do business.

          

  131. Sole proprietor2. The individual owner (without partners) of an unincorported business.

          

  132. Financial Accounting Standards Board (FASB)5. The organization of accountants that has the responsiblity of creating accounting rules.

          

  133. Expensed14. Recorded the cost as an expense.

          

  134. Periodic inventory method19. The right to buy a portion of each new issuance of stock in order to maintain the same ownership percentage.

          

  135. Deposit not shown9. A bank deposit made too late to show up on the bank statement.

          

  136. Principal17. The amount borrowed; this is the non-interest portion paid back when making loan payments.

          

  137. Quick assets11. Assets quickly changeable into cash: cash, short-term investments, and net accounts receivable.

          

  138. Temporary accounts3. An account that gets subtracted from its related account. These accounts always get reported as negative numbers.

          

  139. Principal11. The loan amount that remains unpaid.

          

  140. Clear the bank9. A check has ______ ___ _____ if the payee has presented the check to the bank and the bank has paid it by taking money out of the maker's account.

          

  141. Bonds18. Certificates that corporations (and governments) issue to borrow large amounts of money from a large number of people. The certificates call for periodic cash payments each year with a lump sum payment on the maturity date.

          

  142. Material15. Modified Accelerated Cost Recovery System, for which IRS tables tell the rate by which to multiply an asset's historical cost.

          

  143. Ratio analysis20. Used when a company compares its current results with those from a previous year.

          

  144. Periodic cash payments12. The inventory method that keeps track of merchandise costs in various purcahses and contra-purchases accounts and then computes cost of goods sold on the income statement. Inventory on the books is adjusted only at year-end.

          

  145. Other comprehensive income20. A section on the income statement showing gains from the normal process of selling assets and investments

          

  146. Liabilities2. Debts owed to people outside the company.

          

  147. Cost of goods sold3. The cost to the business of the goods that it sells.

          

  148. Declaration date19. The date on which the corporate board of directors declares a dividend.

          

  149. Specific unit3. A tool to keep track of the ups and downs in accounts. The up go on one of the T and the downs on the other side.

          

  150. MACRS12. The inventory system that assumes the latest items purchased are the first ones sold.

          

  151. Research and Development19. Money partners receive for some reason other than splitting profits by some ratio.

          

  152. Direct method4. The method of calculating cash flow from operations that does not start with net income, but does show cash-in and cash-out categories.

          

  153. Balanced books2. When "Where did it go?" equals "Where did it come from?" or when a company's assets equal its liabilities plus owner's equity.

          

  154. Other gains and losses20. A section on the income statement showing gains from the normal process of selling assets and investments

          

  155. Wages payable17. The account that reflects interest accrued on business debts.

          

  156. Investments4. Uses of money to buy assets that make more money. Long-term investments are in assets such as buildings and equipment. Short-term investments are in assets such as certificates of deposit or stock.

          

  157. Write-off18. The amount that lenders pay for a bond in excess of the face amount.

          

  158. Bondholder6. The process of taking amounts from recorded business transactions and placing those amounts as debits or credits in the various accounts.

          

  159. Sharing ratio19. The method of splitting partnership profits after making guaranteed payments.

          

  160. Netted3. When numbers are "_____", they combine so that the negative numbers get subtracted from the positive numbers.

          

  161. Plant assets10. Assets that have a life longer than one year.

          

  162. Continuing operations9. Expenses or revenues come from transactions that are not part of normal business operations.

          

  163. Treasury stock15. Modified Accelerated Cost Recovery System, for which IRS tables tell the rate by which to multiply an asset's historical cost.

          

  164. Trademarks, trade names16. Intangible asset - Special identifications that are protected against infringment.

          

  165. Fiscal year11. The person who borrows money and writes a note promising to pay in the future.

          

  166. Incorporate3. A supply of items a business has on hand.

          

  167. Income summary3. The financial report that shows the result of business operations over a period of time.

          

  168. Accrue17. Recognize revenues or expenses on the accounting books even though no cash changes hand.

          

  169. Income statement3. The financial report that shows the result of business operations over a period of time.

          

  170. Income3. Income - Expenses =

          

  171. Adjusting entry3. A supply of items a business has on hand.

          

  172. Par value9. The person to whom a check is written.

          

  173. Expenses16. Intangible asset - exclusive right to produce and sell an invention.

          

  174. Warranty16. Intangible asset - exclusive right to produce and sell an invention.

          

  175. Indirect method3. Accounts that explain why assets went up from operations.

          

  176. Operating cycle2. The natural period of time before certain business activities tend to repeat - normally one year.

          

  177. Ethics12. The inventory system that assumes the latest items purchased are the first ones sold.

          

  178. Financial accounting5. The skill of providing financial information to run a large business.

          

  179. Stock dividend19. A distribution of a small amount of stock proportionally to all stockholders.

          

  180. On account3. A tool to keep track of the ups and downs in accounts. The up go on one of the T and the downs on the other side.

          

  181. Bond book value15. The esimated amount recieved for an asset at the end of its useful life. Also called residual value and scrap value.

          

  182. Salvage value15. The esimated amount recieved for an asset at the end of its useful life. Also called residual value and scrap value.

          

  183. Credit18. The amount that lenders pay for a bond in excess of the face amount.

          

  184. Full amortized16. When an intangible asset is fully amortized, all of its cost will have been allocated to past fiscal periods, and its book value will be zero.

          

  185. Residual value19. An accounting value, the equivalent to par value, given to stock with no par value written on the stock certificate.

          

  186. Retained earnings9. A gain or loss that happens when an asset is sold.

          

  187. Face amount11. The dollar amount written on the face of a note.

          

  188. Posting12. The inventory system that assumes the latest items purchased are the first ones sold.

          

  189. LIFO12. The inventory system that assumes the latest items purchased are the first ones sold.

          

  190. Maker2. Economic resources that the business plans to use in the future to make money.

          

  191. Depreciation convention15. Assumptions about the purchase dates of fixed assets in order to simplify the depreciation process.

          

  192. Outstanding5. The check of business accounting records in order to give an opinion on whether the financial statements present teh business fairly.

          

  193. General ledger18. The investor who currently owns the bond certificates.

          

  194. Draw5. The check of business accounting records in order to give an opinion on whether the financial statements present teh business fairly.

          

  195. Consumption method for supplies13. The method of accounting for operating supplies that recognizes supplies as an expense when they are consumed. When supplies are purchased, the debits are stored in supplies inventory. The supplies expese account is not touched until the inventory is adjusted.

          

  196. Cash flow statement19. A share of the profits distributed to stockholders in the form of cash.

          

  197. Managerial accounting5. The skill of providing financial information to run a large business.

          

  198. T-account3. A tool to keep track of the ups and downs in accounts. The up go on one of the T and the downs on the other side.

          

  199. Operating revenue15. The esimated amount recieved for an asset at the end of its useful life. Also called salvage value and residual value.

          

  200. Closing6. The process of taking amounts from recorded business transactions and placing those amounts as debits or credits in the various accounts.

          

  201. Balance sheet2. When "Where did it go?" equals "Where did it come from?" or when a company's assets equal its liabilities plus owner's equity.

          

  202. Net income20. In a corporation, net income equals all revenues minus all expenses except "other comprehensive income."

          

  203. Amortization expense16. The amount of an intangible asset used up during the period.

          

  204. Owner's equity14. Assets that have a life longer than one year. Also capital and plant assets.