University of Central Florida (UCF) ACG2021 Principles of Financial Accounting Exam 1 Practice Test

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• Which financial statement reports the company's revenues and expenses over an interval of time?
• Deferred Revenue is recorded when
• Which principle requires recognizing expenses in the same period as the revenues they help generate?
• Who are trained individuals hired by a company as independent party to express a professional opinion of the accuracy of that company's financial statements?
• When a company purchases equipment for cash, which accounts are affected and how?
• What is the effect of issuing stock for cash on the balance sheet?
• An adjusting entry to recognize accrued expenses increases which accounts?
• Which of the following is a contra-asset account?
• Cash in advance from a customer for products or services to be provided in the future.
• Measure business activities of a company and communicate those measurements to external parties for decision-making purposes.
• The component of owner's equity representing contributed capital from shareholders is called
• What is the basic accounting equation?
• Costs of assets acquired in one period that will be expensed in a future period.
• Which account type has a credit-normal balance?
• What is the adjusting entry to recognize revenue that was previously recorded as unearned revenue but is now earned?
• Entries that transfer balances of all temporary accounts (revenues, expenses, and dividends) to the balance of the Retained Earnings account.
• Beginning Retained Earnings is 25,000. During the period, Revenues are 90,000 and Expenses are 60,000, and Dividends are 12,000. Ending Retained Earnings are:
• Accounts that represent amounts expected to be collected from customers for delivered services or products are called
• Which statement is true about the relationship between Net Income and Retained Earnings?
• Which term describes amounts owed to creditors?
• What is the overarching impact of adjusting entries on the financial statements?
• Stockholders' equity is composed of which components?
• Beginning Retained Earnings is 30,000; Net Income is 20,000; Dividends are 20,000. Ending Retained Earnings is:
• Beginning Retained Earnings is 90,000; Net Income is 15,000; Dividends are 5,000. Ending Retained Earnings is:
• Beginning Retained Earnings is 50,000. Net Income is 25,000. Dividends are 10,000. Ending Retained Earnings is:
• What is the typical sequence of the accounting cycle (high level)?
• What is the standard entry to record depreciation expense?
• Which term describes the costs of providing products and services?
• What is the effect of a note payable issued for cash on the accounting equation?
• How does the allowance method differ from the direct-write-off method?
• If a company purchases supplies on account, what is the journal entry?
• Cash payments to stockholders (owners).
• Which term describes a chronological record of all transactions affecting a firm?
• Which change would most directly increase ending Retained Earnings?
• Where are dividends typically reported in the financial statements?
• Under the allowance method, recognizing bad debt expense affects net income and assets by which description?
• Which of the following best describes 'closing entries'?
• Beginning Retained Earnings is 60,000; Net Income is 25,000; Dividends are 5,000. Ending Retained Earnings is:
• Which financial statement presents the financial position of the company on a particular date?
• What is the purpose of closing entries?
• What is a trial balance?
• The balance sheet accounts where the balances are carried forward from period to period.
• Which of the following accounts has a debit-normal balance?
• What is a typical source document used to record cash received from a customer?
• Which term describes resources owned by a company?
• Which statement is used to verify that total debits equal total credits across all accounts before financial statements are prepared?
• How do you record accrued interest expense at year-end?
• What is the process of transferring debit and credit information from the journal to the individual accounts in the general ledger?
• What would you include in a balance sheet for current liabilities?
• What is the effect of paying a previously accrued expense?
• Which statement best describes the relationship between unearned revenue and revenue earned over time?
• Which financial statement summarizes the changes in stockholders' equity over an interval of time?
• Which statement is true? Net Income equals Revenues minus Expenses.
• A service performed on account for $500 increases which two accounts?
• Which item is the list of all account names used to record a company's transactions?
• Promises to pay cash in the future to creditors when purchasing supplies or materials.
• GAAP is an acronym for which set of accounting guidelines?
• Which of the following is found on the Balance Sheet?
• Which of the following is NOT typically classified as a current liability?
• Which term is defined as the rules of financial accounting?
• What is the term for the process of moving the debit and credit details from the journal into the general ledger accounts?
• Which equation shows a company's resources equal creditors' and owners' claims to those resources?
• Which statement best describes the purpose of accumulated depreciation?
• Cumulative amount of net income earned over the life of the company that has not been distributed to stockholders as dividends.
• Which document is typically used to record a sale to a customer?
• Beginning Retained Earnings is 45,000; Net Income is 0; Dividends are 0. Ending Retained Earnings is:
• Which statement best describes the matching principle?
• Which account increases when recording accrued interest payable at year-end?
• Which account is used to record the allocation of the cost of a long-term asset to expense over its useful life?
• Which of the following is not typically presented as a primary financial statement?
• Which statement correctly distinguishes prepaid expenses from accrued expenses?
• How is revenue recognized for services performed but not yet billed (accrued revenue)?
• Under the allowance method, how is an uncollectible account written off?
• What is the collection of all accounts and their balances called, used to track all transactions?
• Net income is Revenues minus Expenses. If Revenues are 100,000 and Expenses are 75,000, Net Income is 25,000. Beginning Retained Earnings are 40,000 and Dividends are 15,000. Ending Retained Earnings are:
• Which financial statement measures activities involving cash receipts and cash payments over an interval of time?
• When salaries that were accrued at year-end are paid in the following period, what is the entry?
• What is accrual basis accounting?
• How does the adjusted trial balance facilitate preparation of financial statements?
• Which step is the final part of the high-level accounting cycle sequence?
• Which term is the asset's historical cost less accumulated depreciation?
• Which pair of account types has debit-normal balances?
• Liquid assets owned by the company.
• Costs of assets acquired in one period that will be expensed in a future period.
• Beginning Retained Earnings is 75,000; Net Income is 25,000; Dividends are 10,000. Ending Retained Earnings is:
• A type of account that is intended to have its balance be the opposite of the normal balance of its companion account.
• Retained earnings reflect which of the following?
• What is the purpose of an adjusted trial balance?
• How does a periodic inventory system determine cost of goods sold?
• Which document is the initial chronological record where a transaction is first recorded?
• Which entry would record a purchase of equipment on credit?
• What is the adjusting entry to recognize revenue earned but not yet billed (accrued revenue)?
• Dividends are found on which financial statement?
• If services are performed on account, what is the journal entry?
• The adjusting entry for a prepaid expense at period end serves to
• Which entries are used to record events that have occurred but have not yet been entered in the accounts, such as recognizing insurance expense for prepaid policies?
• Which of the following is found on the Income Statement?
• The process of allocating the cost of an asset to expense over its useful life.
• Which term represents the owners' claims to the resources of the company?
• Which financial statement reports changes in retained earnings and overall equity due to net income and dividends?
• How do adjusting entries affect net income and asset/liability balances?
• Which of the following is an asset typically reported on the balance sheet?
• What is the purpose of the Allowance for Doubtful Accounts?
• Under accrual accounting, when is revenue recognized?
• Which account represents the cumulative amount of depreciation expensed against a specific asset?
• Which term describes the inflow of resources from selling goods or services?
• The period during which financial statements are prepared and transactions are aggregated is called the accounting period.
• Which term refers to the costs of operating a business, such as salaries, rent, and utilities?
• Beginning Retained Earnings is 60,000. Net Income is 30,000. Dividends are 5,000. Ending Retained Earnings is:
• Under cash-basis accounting, when are revenues recorded and expenses recorded?
• Beginning Retained Earnings is 150,000; Net Income is 50,000; Dividends are 0. Ending Retained Earnings is:
• Which concept equals the difference between revenues and expenses?
• What is the difference between cash basis income statement and accrual basis income statement?
• Which of the following transactions increases equity?
• Which term represents the owners' residual interest in the assets after liabilities are subtracted?
• Under a perpetual inventory system, how is the purchase of inventory recorded?
• Beginning Retained Earnings is 20,000; Net Income is 100,000; Dividends are 0. Ending Retained Earnings is:
• If a company pays its supplier, what is the journal entry?
• Net realizable value of accounts receivable is best described as the accounts receivable balance minus what?
• Which principle requires expenses to be recognized in the same period as the revenues they help generate?
• According to the revenue recognition principle, revenue should be recorded in which period?
• Which formula computes straight-line depreciation per period?
• What is the effect on the financial statements of earning revenue on a $1,000 service performed on account?
• What is the adjusting entry for accrued expenses at period end (e.g., salaries)?
• Amounts the company expects to collect from customers based on the delivery of service or products.
• If a company borrows cash from a bank, what happens to the accounting equation?
• Depreciation expense is reported on which financial statement?
• Which statement describes revenue recognition under accrual accounting?
• Which listing shows all accounts and their balances after adjusting entries have been recorded?
• What is the adjusting entry for a prepaid expense at the end of the period?
• If a company incurs an expense on account, which entry would be recorded?
• Which financial statement would you consult to assess a company's financial position as of a date?
• What term describes an economic event that initiates the accounting process?
• When adjusting for unearned revenue, what happens if revenue is recognized partially?
• In a perpetual inventory system, what entry records the sale of inventory on account?
• Which document lists all accounts and their balances at a specific date, showing total debits and credits?
• What does the accounting equation express?
• A contra-asset account is best described as?
• Revenues, expenses, and dividends are closed out at the end of each accounting period and transferred to Retained Earnings so that the new period begins with a zero balance for these accounts.
• Which statement best describes permanent versus temporary accounts?
• If a service is performed for cash, what is the journal entry?
• Beginning Retained Earnings is 100,000. Net Income is 50,000. Dividends are 0. Ending Retained Earnings are:
• What is the adjusting entry for depreciation?
• What is the purpose of the Trial Balance in the accounting process?
• What is the normal balance of Accumulated Depreciation?
• What is the impact of depreciation on the income statement and balance sheet?
• Which financial statements are prepared directly from the adjusted trial balance?
• Which sequence represents the typical steps of the accounting cycle from start to closing entries?
• What is the fundamental rule of double-entry accounting?
• Why is GAAP important for financial accounting?
• Under accrual-basis accounting, when are revenues recorded and when are expenses recorded?
• Which accounts are affected by the depreciation adjusting entry?
• Under the allowance method, what is the effect of writing off a specific uncollectible account on total assets?
• Which balance increases when recording bad debt expense under the allowance method?
• When are adjusting entries prepared in the accounting cycle?
• What term is used for a listing that reflects the updated balances after making year-end adjustments?
• What is the average time between purchasing or acquiring inventory and receiving cash proceeds from its sale?
• In accounting, accounts that carry their balances to the next period are called.
• What is the difference between Accounts Payable and Notes Payable?
• An adjusting entry to record accrued revenue increases which accounts?
• Which term describes the summary of the effects of all transactions related to a particular item over a period of time?
• Amount shareholders have invested in the business.
• Which term describes the amounts earned from selling products or services?
• Temporary accounts are closed to Retained Earnings at period end. Which account is the target of these closing entries?
• Total amounts owed to creditors for loaning money to the company.