ACCOUNTING 201 PRACTICE EXAM QUESTIONS AND
ANSWERS GRADED A+
✔✔income summary - ✔✔used to make entry to make temporary accounts zero
✔✔retained earnings - ✔✔income summary balance is closed to
✔✔sale discount - ✔✔term used by a seller to describe a cash discount granted to
buyers who pay within the discount period
✔✔adjusted bank balance - ✔✔deposits in transit
bank erros
payments received by bank
interest paid by back
bank service charge
NSF
✔✔adjusted book balance - ✔✔outstanding checks
recording errors
✔✔double declining balance - ✔✔2x straight line rate (100%/estimated life) =rate
multiply (2x straight line rate) X book value
✔✔units of production - ✔✔(number of units produced)/(life in number of units)
X (cost-salvage value)
✔✔book value - ✔✔cost - accumulated depreciation
✔✔interest - ✔✔PRT
✔✔straight line bond amortization - ✔✔method allocating an equal amount of bond
interest expense to each period of the bond life
✔✔amortization - ✔✔process of allocating the cost of an intangible asset to expense
over its estimated useful life
✔✔higher interest rate - ✔✔smaller the present value
✔✔bond price based upon - ✔✔PV of Principal + PV of Interest Payments
✔✔ balance sheet - ✔✔assets
liabilities
equity
, ✔✔income statement - ✔✔revenue
expense
gains/losses
gross profit
net income/loss
✔✔statement of retained earning - ✔✔beginning capital
contributed capital
ending capital
✔✔statement of cash flow - ✔✔listing of cash inflows/outflows
operating
investing
financing
✔✔steps in accounting cycle - ✔✔identity
journalize
communicate
✔✔cost principle - ✔✔record at cost
✔✔revenue recognition - ✔✔revenue recognized when earned
✔✔matching principle - ✔✔expenses and related revenue recorded in the same period
✔✔adjusting entries - ✔✔depreciation
accruals interest/revenue
prepaid
✔✔LIFO - ✔✔last in first out
✔✔FIFO - ✔✔first in first out
✔✔cost of goods sold - ✔✔beginning inventory plus net purchases minus ending
inventory
✔✔gross profit - ✔✔sales minus cost of goods sold
✔✔perpetual - ✔✔ongoing
✔✔bank reconciliation - ✔✔adjusted bank balance
adjusted book balance
✔✔straight line depreciation - ✔✔cost - salvage value / estimated life
ANSWERS GRADED A+
✔✔income summary - ✔✔used to make entry to make temporary accounts zero
✔✔retained earnings - ✔✔income summary balance is closed to
✔✔sale discount - ✔✔term used by a seller to describe a cash discount granted to
buyers who pay within the discount period
✔✔adjusted bank balance - ✔✔deposits in transit
bank erros
payments received by bank
interest paid by back
bank service charge
NSF
✔✔adjusted book balance - ✔✔outstanding checks
recording errors
✔✔double declining balance - ✔✔2x straight line rate (100%/estimated life) =rate
multiply (2x straight line rate) X book value
✔✔units of production - ✔✔(number of units produced)/(life in number of units)
X (cost-salvage value)
✔✔book value - ✔✔cost - accumulated depreciation
✔✔interest - ✔✔PRT
✔✔straight line bond amortization - ✔✔method allocating an equal amount of bond
interest expense to each period of the bond life
✔✔amortization - ✔✔process of allocating the cost of an intangible asset to expense
over its estimated useful life
✔✔higher interest rate - ✔✔smaller the present value
✔✔bond price based upon - ✔✔PV of Principal + PV of Interest Payments
✔✔ balance sheet - ✔✔assets
liabilities
equity
, ✔✔income statement - ✔✔revenue
expense
gains/losses
gross profit
net income/loss
✔✔statement of retained earning - ✔✔beginning capital
contributed capital
ending capital
✔✔statement of cash flow - ✔✔listing of cash inflows/outflows
operating
investing
financing
✔✔steps in accounting cycle - ✔✔identity
journalize
communicate
✔✔cost principle - ✔✔record at cost
✔✔revenue recognition - ✔✔revenue recognized when earned
✔✔matching principle - ✔✔expenses and related revenue recorded in the same period
✔✔adjusting entries - ✔✔depreciation
accruals interest/revenue
prepaid
✔✔LIFO - ✔✔last in first out
✔✔FIFO - ✔✔first in first out
✔✔cost of goods sold - ✔✔beginning inventory plus net purchases minus ending
inventory
✔✔gross profit - ✔✔sales minus cost of goods sold
✔✔perpetual - ✔✔ongoing
✔✔bank reconciliation - ✔✔adjusted bank balance
adjusted book balance
✔✔straight line depreciation - ✔✔cost - salvage value / estimated life
