Financial Accounting - CLEP
testbank questions (All
chapters)with well detailed
solutions ||highly graded actual
exam
Assets - ANSWER-2. Economic resources that the business plans to use in the future to
make money.
Balance sheet - ANSWER-2. The financial report that shows business assets, liabilities,
and owner's equity as of a particular day.
Balanced books - ANSWER-2. When "Where did it go?" equals "Where did it come
from?" or when a company's assets equal its liabilities plus owner's equity.
Capital - ANSWER-2. Assets that help a business or a person make money.
Capitalized - ANSWER-2. When money is changed into another asset that helps the
business make money.
Creditors - ANSWER-2. Outsiders to whom the company owes money.
Current assets - ANSWER-2. Assets that can be used to pay current liabilities.
Current liabilities - ANSWER-2. Debts that must be paid within one year or one
operating cycle, whichever is longer.
Financial accounting - ANSWER-2. The skill of producing financial statements from
business transactions.
Fiscal year - ANSWER-2. The 12-month period a business uses to report the results of
its operations.
Liabilities - ANSWER-2. Debts owed to people outside the company.
Liquid - ANSWER-2. The easier it is to change an asset into cash, the more ______ that
asset is.
, Operating cycle - ANSWER-2. The natural period of time before certain business
activities tend to repeat - normally one year.
Owner's equity - ANSWER-2. That portion of the business the owner gets to keep after
paying off all creditors.
Sole proprietor - ANSWER-2. The individual owner (without partners) of an
unincorported business.
Account - ANSWER-3. A place on the financial books to keep track of financial
information that the owner wants to know.
Accumulated depreciation - ANSWER-3. The contra-asset account that accumulates all
the depreciation of long-lived assets over the years.
Chart of accounts - ANSWER-3. The official list of all business accounts.
Contra account - ANSWER-3. An account that gets subtracted from its related account.
These accounts always get reported as negative numbers.
Contra-asset account - ANSWER-3. An account that gets subtracted from an asset
account.
Cost of goods sold - ANSWER-3. The cost to the business of the goods that it sells.
Depreciation expense - ANSWER-3. The amount of long-lived assets used up during
operations.
Draw - ANSWER-3. Money that the owner takes from the busines, or money in the
business account that the owner spends on personal bills. Also known as Withdrawal.
Expensed - ANSWER-3. Money is "_______" if it is gone forever - if there remains no
useful asset as a result of the spending. The opposite of capitalized.
Expenses - ANSWER-3. Accounts that explain why assets went down from operations.
Income - ANSWER-3. Accounts that explain why assets went up from operations.
Income statement - ANSWER-3. The financial report that shows the result of business
operations over a period of time.
Inventory - ANSWER-3. A supply of items a business has on hand.
Net - ANSWER-3. A word that means a subtraction has occurred.
testbank questions (All
chapters)with well detailed
solutions ||highly graded actual
exam
Assets - ANSWER-2. Economic resources that the business plans to use in the future to
make money.
Balance sheet - ANSWER-2. The financial report that shows business assets, liabilities,
and owner's equity as of a particular day.
Balanced books - ANSWER-2. When "Where did it go?" equals "Where did it come
from?" or when a company's assets equal its liabilities plus owner's equity.
Capital - ANSWER-2. Assets that help a business or a person make money.
Capitalized - ANSWER-2. When money is changed into another asset that helps the
business make money.
Creditors - ANSWER-2. Outsiders to whom the company owes money.
Current assets - ANSWER-2. Assets that can be used to pay current liabilities.
Current liabilities - ANSWER-2. Debts that must be paid within one year or one
operating cycle, whichever is longer.
Financial accounting - ANSWER-2. The skill of producing financial statements from
business transactions.
Fiscal year - ANSWER-2. The 12-month period a business uses to report the results of
its operations.
Liabilities - ANSWER-2. Debts owed to people outside the company.
Liquid - ANSWER-2. The easier it is to change an asset into cash, the more ______ that
asset is.
, Operating cycle - ANSWER-2. The natural period of time before certain business
activities tend to repeat - normally one year.
Owner's equity - ANSWER-2. That portion of the business the owner gets to keep after
paying off all creditors.
Sole proprietor - ANSWER-2. The individual owner (without partners) of an
unincorported business.
Account - ANSWER-3. A place on the financial books to keep track of financial
information that the owner wants to know.
Accumulated depreciation - ANSWER-3. The contra-asset account that accumulates all
the depreciation of long-lived assets over the years.
Chart of accounts - ANSWER-3. The official list of all business accounts.
Contra account - ANSWER-3. An account that gets subtracted from its related account.
These accounts always get reported as negative numbers.
Contra-asset account - ANSWER-3. An account that gets subtracted from an asset
account.
Cost of goods sold - ANSWER-3. The cost to the business of the goods that it sells.
Depreciation expense - ANSWER-3. The amount of long-lived assets used up during
operations.
Draw - ANSWER-3. Money that the owner takes from the busines, or money in the
business account that the owner spends on personal bills. Also known as Withdrawal.
Expensed - ANSWER-3. Money is "_______" if it is gone forever - if there remains no
useful asset as a result of the spending. The opposite of capitalized.
Expenses - ANSWER-3. Accounts that explain why assets went down from operations.
Income - ANSWER-3. Accounts that explain why assets went up from operations.
Income statement - ANSWER-3. The financial report that shows the result of business
operations over a period of time.
Inventory - ANSWER-3. A supply of items a business has on hand.
Net - ANSWER-3. A word that means a subtraction has occurred.
