FIU Accounting Entrance Exam Questions with Correct Solutions Latest Version

FIU Accounting Entrance Exam Questions with Correct Solutions Latest Version Assets - Liabilities - Equity = _____ - Answers 0 Original Value of an asset - Answers Cost basis Business will continue to operate in the near future - Answers Going Concern Principle we report in the stable monetary currency of the country - Answers Monetary Unit Assumption owner's actions are different than the business and kept separate - Answers Economic Entity Assumption you can divide the company into periods or quarters - Answers Accounting Period Assumption U.S. GAAP reports at a ____ basis - Answers cost DC ADE LER - Answers debits credits assets drawing expenses liabilities equity revenue Written document that carries interest - Answers Notes Payable Record of all accounts in the system - Answers Trial Balance Transferring from the journal to the ledger - Answers Posting only the immediate recognition of revenues and expenses ---ignores long term liabilities and payables - Answers Cash Basis Action before the dollars are paid - Answers Accrual Dollars are received before the action - Answers Deferral Money paid in advance ---entry for the resident ---recorded as an asset - Answers Prepaid Rent Money received by an individual for a service yet to be provided ---entry for the tenet ---recorded as a liability - Answers Unearned Revenue revenue should only be recognized when they are earned, regardless of when payment is received - Answers Revenue Recognition Principle we recognize expenses when we consume what we used to help generate revenue - Answers Matching Principle a business should report the financial results of it's activities over a standard period of time (monthly, quarterly, annually) - Answers Time period concept accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy. - Answers Depreciation Cost of an Asset - Residual Value/ Useful life of an asset - Answers Straight Line Method 1. Analyze transactions 2. Prepare journal entry 3. Post transaction in general ledger 4. Prepare an unadjusted trial balance (1st) 5. Prepare adjusting entries 6. Prepare an adjusted trial balance (2nd) 7. Prepare financial statements 8. Prepare closing entries 9. Prepare a post closing trial balance (3rd) - Answers Accounting Cycle revenue dr income summary cr - Answers 1st closing entry income summary dr Expenses cr - Answers 2nd closing entry income summary dr retained earnings cr - Answers 3rd closing entry retained earnings dr dividends cr - Answers 4th closing entry; declaration date current assets/current liabilities - Answers current ratio (current assets - inventory)/current liabilities - Answers quick ratio Revenue - COGS - Answers Gross Income Gross Income - Expenses - Answers Net Income Net Income - Dividends Paid - Answers Retained Earnings includes subsections, or classifications, within them to make it easier to identify accounts. - Answers Classified Balance Sheet shows accounts under three main section headings. - Answers Unclassified Balance Sheet a journal entry made in an accounting period, which reverses selected entries made in the immediately preceding period. - Answers Reversing Entry keeps continual count of inventory at all times - Answers Perpetual will count inventory at certain periods. - Answers Periodic Gross Profit/Revenue X 100 - Answers Gross Profit % buyer pays for the shipping - Answers FOB Shipping Point seller pays for shipping and buyer doesn't become the new owner until they arrive. - Answers FOB Destination shipping and handling costs to bring goods into a company - Answers Freight In shipping and handling costs to bring goods to the customers - Answers Freight Out policy of anticipating possible future losses but NOT future gains - Answers Conservatism once you adopt an accounting principle or method, continue to follow in consistently in future accounting periods so the results from period to period are comparable - Answers Consistency Principle an accounting standard can be ignored if the net impact of doing so has such a small impact on the financial statements - Answers Materiality Principle requires a business to report all necessary information about their financial statements and other relevant information to anyone who reads the statements - Answers Disclosure Principle rule states a business must record the cost of inventory at whichever cost is lower - Answers Lower of cost or market value; LCM measures how rapidly merchandise is sold - Answers Inventory Turnover COGS/ Avg. Inventory - Answers Inventory Turnover Tracking each individual product with their price - Answers Specific Identification method OLDEST INVENTORY IS SOLD FIRST - Answers FIFO MOST RECENT IS SOLD FIRST - Answers LIFO Beginning Inventory + Purchases - Ending Inventory + (other costs such as Freight In) = _____ - Answers Cost of Goods Sold 1. safeguard assets 2. increases efficiency 3. produce reliable accounting records 4. follow rules of the government and company - Answers 4 objectives of good internal controls small amount of funds in the form of cash used for expenditures where the amount is too small to merit writing a check - Answers Petty Cash information hidden in a code - Answers Encryption sending emails that look like they are from well known companies in order to induce individuals to reveal personal information such as passwords and credit card numbers - Answers Phishing trying to make sure the books between the company and the banks are the same - Answers Bank Reconciliation Opportunity Motivation Rationalization - Answers Fraud Triangle Deposit in Transit - Answers ADD; Bank Entry Outstanding Checks - Answers DEDUCT; Bank Entry Notes Collected - Answers ADD; Books Entry