RDG Accounting Test

What financial statement shows financial health?

Balance Sheet

What two main elements are on the income statement? What do these two elements feed into? List sub elements of both

- Revenues and Expenses - Net Income - Revenues (COGS), Expenses (Salaries, Overhead, Depreciation/Amortization, Interest, etc.)

Cash vs accrual accounting

1. Accrual accounting must be used by all companies who sell securities (stock) to the public 2. Cash accounting can be used by any companies who does not sell stock to the public. Cash accounting is also used by individuals to account for their personal finances 3. If a company who does not sell stock to the public attempts to get a band loan, they are typically required to present their financial statements using accrual accounting 4. This is typically required because cash accounting can be easily manipulated and thus lead to misleading financial statement

Depreciation

A decrease in value which something such as equipment, usually constant (such as 20% over 5 years)

Basic Accounting Equation

Assets = Liabilities + Stockholders' Equity

Which of the following account types increase by debits in double-entry accounting? - Assets, Expenses, Losses - Assets, Revenue, Gains - Expenses, Liabilities, Losses - Gains, Expenses, Liabilities

Assets, Expenses, Losses

What three main elements are on the balance sheet? What is a sub-element of equity?

Assets, Liabilities, Equity Retained Earnings

What is on a balance sheet?

Assets, Liabilities, Stockholders Equity

Assets are a normal _______ account, while liabilities and equity are a normal _________ account.

Debit (Debit to increase, credit to decrease), Credit (Vice-Versa)

Expenses are a normal _______ account, while revenue is normal _________ account.

Debit, Credit

What is on a income statement?

Expenses and Revenue

Cash Flow Statement

In and out flow of cash from investing, operating, and financing activities

Amortization

The reduction of a loan by making payments over a period of time

Link to NAU accounting test

https://nau.edu/wp-content/uploads/sites/85/2018/06/NAU-Accounting-Skills-Assessment-Practice-Exam-Revised-0416.pdf