Financial Accounting CLEP Exam with verified || || || || || ||
detailed solutions ||
The financial statement that is described as a "snapshot" of a company's financial position is the
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_______ sheet. - ✔✔Balance || || ||
The ______ method (or basis) of accounting reports expenses when they are incurred (as opposed
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to when they are paid). - ✔✔Accrual
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Land is an asset that is not ____________________. - ✔✔depreciated
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An asset's book value is its cost minus its ______ depreciation. - ✔✔Accumulated.
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The amount of prepaid insurance that has expired in the accounting period is reported as an
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_____. - ✔✔Expense || ||
A credit entry will cause the Cash account balance to _____. - ✔✔Decrease
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Assets = Liabilities + Stockholders' Equity - ✔✔Basic accounting equation
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_______ will cause a corporation's Stockholders' Equity to increase. - ✔✔Revenues
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A listing of the general ledger accounts that does not include the account balances is the _____ of
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accounts. - ✔✔Chart || ||
The general ledger accounts whose balances are closed at the end of the accounting year are the
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______ statement accounts. - ✔✔income
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,The statement of cash flows reports amounts according to three activities: _______, financing,
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and investing. - ✔✔Operating
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The amount of prepaid insurance that has Not expired as of the end of the accounting period is
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reported as an ____. - ✔✔Asset. || || || || ||
Property is not reported at its current market value because of the cost _______. - ✔✔principle.
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The __________-entry system means that each transaction will affect a minimum of two accounts
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and the debits must equal credits. - ✔✔double
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Unearned revenues is reported on the balance sheet as a _______. - ✔✔Liability.
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Under the accrual method, the account that is debited at the time of a sale on credit is Accounts
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_______. - ✔✔Receivable. || ||
Under the accrual method, revenues are reported on the income statement when they are ______.
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- ✔✔Earned.
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Under the accrual method, when a company purchases goods from a supplier on credit, the
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company will credit Accounts ___________. - ✔✔Payable. || || || || || ||
This is an allocation process (not a valuation process) associated with equipment and other plant
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assets. - ✔✔Depreciation. || ||
The component of Stockholders' equity that serves as a link to the corporation's income statement
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is retained _________. - ✔✔Earnings.
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Which financial statement reports the revenues and expenses for a period of time such as a year or
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a month? - ✔✔Income Statement
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,Which financial statement reports the assets, liabilities, and stockholder's (owner's) equity at a
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specific date? - ✔✔Balance sheet || || || ||
Under the accrual basis of accounting, revenues are reported in the accounting period when which
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of the following occurs? - ✔✔services or goods have been delivered
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Under the accrual basis of accounting, expenses are reported in the accounting period when which
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of the following occurs? - ✔✔An expense matches the revenues or is used up.
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Revenues minus expenses equals _______. - ✔✔net income
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Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the
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balance sheet and are referred to as ________. - ✔✔assets
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Assets are usually reported on the balance sheet at which amount? - ✔✔cost. this is true because
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of the cost principle.
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Obligations (amounts owed) are reported on the balance sheet and are referred to as _______. -
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✔✔Liabilities.
Liabilities often have the word ________ in their account title. - ✔✔payable
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Unearned Revenues is what type of account? - ✔✔Liability. The company that is to perform the
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service or is to deliver the product has received the cash in advance and therefore has an
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obligation (liability) to deliver the service or the product.
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Accounting entries involve a minimum of how many accounts? - ✔✔TWO. Because of the
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double-entry system, every transaction will effect at least two accounts.
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, The listing of all of the accounts available for use in a company's accounting system is known as
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the - ✔✔Chart of accounts
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Assets minus liabilities equals __________. - ✔✔Stockholders' equity or owner's equity (net
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assets if a nonprofit) || || ||
Which term is associated with "left" or "left side"? - ✔✔Debit
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Which term is associated with "right" or "right side"? - ✔✔Credit
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When cash is received, the account Cash will be _____. - ✔✔Debited
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When a company pays a bill, account Cash will be ________. - ✔✔Credited.
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What will usually cause an asset account to increase? - ✔✔Debit
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What will usually cause the liability accounts Accounts Payable to increase? - ✔✔credit
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Entries to expenses such as Rent expense are usually______. - ✔✔Debits
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Entries to revenues accounts such as Services revenues are usually_______. - ✔✔Credits
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The book value of an asset or liability is also known as the _____ amount - ✔✔carrying
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The basis or method of accounting where expenses are reported as they are incurred rather than
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when they are paid. - ✔✔Accrual
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Generally accepted accounting guidelines are referred to as _______. - ✔✔Principles.
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detailed solutions ||
The financial statement that is described as a "snapshot" of a company's financial position is the
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_______ sheet. - ✔✔Balance || || ||
The ______ method (or basis) of accounting reports expenses when they are incurred (as opposed
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to when they are paid). - ✔✔Accrual
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Land is an asset that is not ____________________. - ✔✔depreciated
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An asset's book value is its cost minus its ______ depreciation. - ✔✔Accumulated.
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The amount of prepaid insurance that has expired in the accounting period is reported as an
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_____. - ✔✔Expense || ||
A credit entry will cause the Cash account balance to _____. - ✔✔Decrease
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Assets = Liabilities + Stockholders' Equity - ✔✔Basic accounting equation
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_______ will cause a corporation's Stockholders' Equity to increase. - ✔✔Revenues
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A listing of the general ledger accounts that does not include the account balances is the _____ of
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accounts. - ✔✔Chart || ||
The general ledger accounts whose balances are closed at the end of the accounting year are the
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______ statement accounts. - ✔✔income
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,The statement of cash flows reports amounts according to three activities: _______, financing,
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and investing. - ✔✔Operating
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The amount of prepaid insurance that has Not expired as of the end of the accounting period is
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reported as an ____. - ✔✔Asset. || || || || ||
Property is not reported at its current market value because of the cost _______. - ✔✔principle.
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The __________-entry system means that each transaction will affect a minimum of two accounts
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and the debits must equal credits. - ✔✔double
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Unearned revenues is reported on the balance sheet as a _______. - ✔✔Liability.
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Under the accrual method, the account that is debited at the time of a sale on credit is Accounts
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_______. - ✔✔Receivable. || ||
Under the accrual method, revenues are reported on the income statement when they are ______.
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- ✔✔Earned.
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Under the accrual method, when a company purchases goods from a supplier on credit, the
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company will credit Accounts ___________. - ✔✔Payable. || || || || || ||
This is an allocation process (not a valuation process) associated with equipment and other plant
|| || || || || || || || || || || || || || ||
assets. - ✔✔Depreciation. || ||
The component of Stockholders' equity that serves as a link to the corporation's income statement
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is retained _________. - ✔✔Earnings.
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Which financial statement reports the revenues and expenses for a period of time such as a year or
|| || || || || || || || || || || || || || || || ||
a month? - ✔✔Income Statement
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,Which financial statement reports the assets, liabilities, and stockholder's (owner's) equity at a
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specific date? - ✔✔Balance sheet || || || ||
Under the accrual basis of accounting, revenues are reported in the accounting period when which
|| || || || || || || || || || || || || ||
of the following occurs? - ✔✔services or goods have been delivered
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Under the accrual basis of accounting, expenses are reported in the accounting period when which
|| || || || || || || || || || || || || ||
of the following occurs? - ✔✔An expense matches the revenues or is used up.
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Revenues minus expenses equals _______. - ✔✔net income
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Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the
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balance sheet and are referred to as ________. - ✔✔assets
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Assets are usually reported on the balance sheet at which amount? - ✔✔cost. this is true because
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of the cost principle.
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Obligations (amounts owed) are reported on the balance sheet and are referred to as _______. -
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✔✔Liabilities.
Liabilities often have the word ________ in their account title. - ✔✔payable
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Unearned Revenues is what type of account? - ✔✔Liability. The company that is to perform the
|| || || || || || || || || || || || || || || ||
service or is to deliver the product has received the cash in advance and therefore has an
|| || || || || || || || || || || || || || || || ||
obligation (liability) to deliver the service or the product.
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Accounting entries involve a minimum of how many accounts? - ✔✔TWO. Because of the
|| || || || || || || || || || || || || ||
double-entry system, every transaction will effect at least two accounts.
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, The listing of all of the accounts available for use in a company's accounting system is known as
|| || || || || || || || || || || || || || || || || ||
the - ✔✔Chart of accounts
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Assets minus liabilities equals __________. - ✔✔Stockholders' equity or owner's equity (net
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assets if a nonprofit) || || ||
Which term is associated with "left" or "left side"? - ✔✔Debit
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Which term is associated with "right" or "right side"? - ✔✔Credit
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When cash is received, the account Cash will be _____. - ✔✔Debited
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When a company pays a bill, account Cash will be ________. - ✔✔Credited.
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What will usually cause an asset account to increase? - ✔✔Debit
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What will usually cause the liability accounts Accounts Payable to increase? - ✔✔credit
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Entries to expenses such as Rent expense are usually______. - ✔✔Debits
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Entries to revenues accounts such as Services revenues are usually_______. - ✔✔Credits
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The book value of an asset or liability is also known as the _____ amount - ✔✔carrying
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The basis or method of accounting where expenses are reported as they are incurred rather than
|| || || || || || || || || || || || || || || ||
when they are paid. - ✔✔Accrual
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Generally accepted accounting guidelines are referred to as _______. - ✔✔Principles.
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