Basic Accounting Principles Review

False

Accounting is simply the process used to figure out how much money a business made during a certain time period.

Current liabilities

Accounts payable are classified as which of the following?

Income statement

An __________ is a summary of a company's profit or loss during any one given period of time.

Nine

How many steps are in the business operating cycle?

Monthly

How often should a business calculate profitability and review financial statements?

Credit limits

Income statements are used to help determine_____________.

False

It is often beneficial for a business owner to use business accounts and personal accounts interchangeably.

False

The financial Accounting Standards board is the government agency regulating the accounting industry.

Generally Accepted Accounting Principles

What are the accounting rules used to prepare, present and report financial statements called?

Accounts payable is decreased by a debit

When suppliers are paid which of the following occurs?

Costs of goods sold

Which of the following are the costs directly associated with making or acquiring products such as materials purchased from outside suppliers?

Land

Which of the following is NOT a current asset?

Income statements

Which of the following is also known as a profit and loss statement?

Gross Profit

Which of the following is derived by subtracting the cost of goods sold from the net sales Figures?

Net income

Which of the following is the amount of money the business has earned after paying income taxes?

Revenue-Expenses= Profit

Which of the following is the correct equation for profit?

Collect payment for credit sales

Which of the following is the last step in the business operating cycle?

Cash

Which of the following is the most liquid asset?

Sales Figures

Which of the following represents the amount of revenue generated by a business?

Assets= Liabilities + Owner's Equity

Which of the following represents the basic accounting equation?

Profit and loss statement

Which of the following shows any changes which have occurred in the numerical balances of a company?

Balance Sheet

Which of the following shows the numerical balances determined by the chart of accounts?

Debits decrease liabilities

Which of the following statements is TRUE?

Assets

______________ are items of value your company owns.

Liabilities

___________are any debts or obligations owed by the company.