Accounting test (chapter 1,2,3)

The ____ is Assets = Liabilities + Owner's Equity.

accounting equation

______ is income earned from the sale of goods and services

revenue

The account Account Receivable is an example of a (n)

asset

A(n) _____ is any property or item of value owned by a business.

asset

A(n) _____ exists independently of its owner's personal holdings.

business entity

A(n) _______ is an economic event that causes a change in assets, liabilities, or owner's equity.

business transaction

A merchandising business

buys finished products and resells them

A(n) ______ is willing to take the risks of running a business.

entrepreneur

Those who transform ideas for products or services into real-world businesses are known as

entrepreneurs

Each of the following is a business expense, except payment for

equipment

The total financial claims to the assets of a business are known as __________

equity

The costs of goods and services used to operate a business are _______.

expenses

A business organized to operate by providing professional services for a fee is called a(n) ___________

service business

_______are activities you do well

skills

A(n) _________ has one owner

sole proprietorship

The most common form of business organization is a

sole proprietorship

One of the disadvantages of a sole proprietorship is

the owner has all he risks

When the owner takes cash or other assets from the business for personal use, a ____ occurs.

withdrawal

An entry level job performing one or two accounting tasks is called a(n)

Accounting clerk

All of the following account names are asset names, except

Accounts Payable

The purchase of a desk on account will increase Office Furniture and will also increase

Accounts Payable

Both businesses and individuals may own and control property. (T/F)

True

One of the purposes of accounting is to provide financial information about property and the rights of a business to that property. (T/F)

True

The accounting equation should remain in balance after each transaction. (T/F)

True

The increases and decreases caused by business transactions are recorded in specific accounts. (T/F)

True

The private enterprise system is based on the right to own property. (T/F)

True

The total financial claims to the assets of a business are referred to as equity. (T/F)

True

When a business transaction occurs, the financial position of the business changes. (T/F)

True

_____ refers to the dollar amount of the owner's equity in the business.

capital

The increases or decreases in a specific item caused by business transactions are recorded in a(n) ________

account

The amount of money owed to the creditors of a business is ________

account payable

To become a(n) _______, you must pass a national test and meet specified experience and education standards.

certified public accountant

The ability to overcome your fears is a sign of

courage

A business transaction that involves a purchase on account is considered to be a(n)

credit transaction

A person or business that sells property on credit, or any person or business to which money is owed, is called a(n) ______

creditor

A(n) ________ handles a broad range of responsibilities, including making business decisions, and preparing and interpreting financial reports.

accountant

A(n) _____ usually performs one or two accounting tasks.

accounting clerk

The time period covered by an accounting report is called

accounting period

A(n) ______ is concerned with the process of recording and reporting financial information

accounting system

_____ is the total amount of money to be received in the future for goods and services sold on credit.

accounts receivable

The owner's claims to the assets of a business are liabilities. (T/F)

False

Money supplied by investors, banks, or owners of a business is called

capital

If the creditor's financial claim to property totals $1,000 and the owner's financial claim to the property totals $9,000, the property is valued at

$10,000

If a business has assets of $6,500 and liabilities of $900, the owner's equity is

$5,600

To find information about a career in accounting

- talk to someone who works in the accounting field - research career information on the Internet - look for information on accounting careers at the local library

Money invested in a business by an owner is called ______

Capital

Of the three forms of business organization, which one pays higher income taxes?

Corporations

A person who has control over but does not own an item of property has a legal right to that item. (T/F)

False

The creditor's financial claim minus the owner's financial claim to an item of property always equals the total cost of the property, (T/F)

False

The owner's personal financial transactions are part of the business's records.

False

The total financial claims do not have to equal the total cost of the property. (T/F)

False

What is the type of organization buys raw materials, such as wood or iron ore and transforms them into finished products through the use of labor and capital.

Manufacturing Business

If a business purchases a calculator on account, the accounts affected by this transaction are

Office Equipment and Accounts Payable

Which is NOT a disadvantage of a partnership?

There is more capital available

"Assets - Liabilities = Owner's Equity" is another way to express the accounting equation (T/F)

True

A business transaction affects at least two accounts (T/F)

True

A creditor has a financial claim to the assets of a business. (T/F)

True

_______ are the principles you live by and the beliefs that are important to you.

Values

When accounting information is processed by hand it is called

a manual accounting system

Accounting for external users of accounting information is called

financial accounting

One example of an accounting assumption is

financial accounting

A business that operates to earn money for its owners is called a(n)

for-profit business

______ operate to earn money for their owners.

for-profit businesses

GAAP stands for

generally accepted accounting principles

A business expected to operate in the future is called a(n)

going concern

A corporation is a business organization that is recognized by law to

have a life of its own

Accounting is often called the "language of business" because

it is the language that managers use to communicate the firm's financial and economic information to external parties such as shareholders and creditors.

______ are the creditor's claims to the assets of the business.

liabilities

Your _____ is the way you use your time, energy, and resources.

lifestyle

Financial accounting reports are often used by

loan officers

Business that spend more than they receive operate at a _______

loss

Accounting for internal users of accounting information is called _________

managerial accounting

One of the ways to set career goals is to

map out a plan

______ is a way to find out about particular careers by asking people in the career to share information and advice.

networking

_____ operate for reasons other than to make money, like protecting and preserving the environment. A business that operates to support a cause or interest.

not-for-profit organizations

Buying ____ is the same as buying on credit.

on account

The owner's claims to the total assets of the business are called ____.

owner's equity

A business owned by two or more people is called

partnership

A(n) _______ has at least two owners

partnership

_____ help you identify the things you like to do.

personal interest tests

_______ is a set of unique qualities that makes us different from all other people.

personality

A free enterprise system allows businesses to

produce the goods and services they choose.

The amount of money earned over and above the amount spent to keep a business operating is called _______

profit

______ is anything of value that is owned or controlled.

property

A(n) ________ firm provides accounting services to clients on a fee basis.

public accounting