Major Fields Business Test [ACTUAL EXAM] LATEST VERSION
[QUESTIONS AND ANSWERS] WITH PRACTICE EXAM DETAILED AND
VERIFIED FOR GUARANTEED PASS- LATEST UPDATE 2025 GRADED
A
Save
Income Statement - CORRECT ANSWER Presents the results of the operations of
an entity over a peroid of time.
Includes: Revenues, Expenses, Income, Gains & Losses
Statement of Equity or Statement of Retained Earnings (Capital) - CORRECT
ANSWER Bridges the gap between the income statement and the balance sheet.
Arrangement depends on type of organization:
Proprietorship: Statement of Owners Equity
Partnership: Statement of Partners Equity
Corporation: Statement of Stockholders Equity
In addition, it contains: Investments by Owners and Distribution to owners
Statement of Cash Flows - CORRECT ANSWER Provides information about a
company's cash receipts and cash payments during a specific period of time.
Includes all 10 elements of financial statements: assets, liabilities, equity, net income,
income, gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to
Owners.
Cash Basis Accounting - CORRECT ANSWER Revenue is recognized in the
accounting period in which the associated cash is received and Expenses are
recognized in the accounting period that the cash is paid.
Accrual Basis Accounting - CORRECT ANSWER Revenue is recognized in the
accounting period in which the revenue is earned, regardless of when the associated
revenue is received. (Recorded when the sale is made, not when it is paid for.)
Depreciation - CORRECT ANSWER A method of allocating the cost of a tangible
asset over its useful life. Businesses depreciate long-term assets for both tax and
accounting purposes.
,Straight-Line Deprecation - CORRECT ANSWER Straight Line Depreciation -
(estimated value/useful life)
Equal amounts of depreciation expense are recorded in each period of the useful life of
the asset, if not disposed of prior to the end of estimated useful life.
The value is divided among estimated life of item.
Double Declining Balance Depreciation - CORRECT ANSWER Double Declining
Balance
An "accelerated" depreciation method (more expense is recorded in the early periods of
useful life and less in the later periods.)
Basic Inventory Equation for Goods - CORRECT ANSWER Beginning Inventory +
Purchases = Goods
Basic Inventory Equation for Cost of Goods Sold (COGS) - CORRECT ANSWER
Goods Available for Sale - Ending Inventory = Cost of Goods Sold (COGS)
Basic Inventory Equation for Ending Inventory - CORRECT ANSWER Beginning
Inventory + Purchases = Goods Available for Sale - Cost of Goods Sold (COGS) =
ending inventory
Periodic Inventory Accounting - CORRECT ANSWER No transactions are recorded
in the inventory account until the end of the accounting period. Merchandise purchases
are recorded in a purchases account.
Inventory is counted and costed at the end of each accounting period. The inventory
account beginning balance is adjusted to physical inventory amount and the difference
is added to or subtracted from periodic Cost of Goods Sold.
Perpetual Inventory Accounting - CORRECT ANSWER Merchandise purchases are
added to the inventory account when the merchandise is received.
Cost of Goods Sold is computed and subtracted from the inventory account as sales are
recorded.
FIFO (Inventory) - CORRECT ANSWER Inventory Oldest items inventory are sold
first .(Example: Fruit)
LIFO (Inventory) - CORRECT ANSWER Most recent items added to inventory are
sold first. (Example: Ore from Mining)
Average Cost (Inventory) - CORRECT ANSWER Ending inventory units are costed
using an average cost of goods available divided by the units available for sale.
(Example: Rope)
, Specific Identification (Inventory) - CORRECT ANSWER Inventory items are tagged
with their cost. (Example: automobiles)
Generally Accepted Accounting Principles (GAAP) - CORRECT ANSWER A
framework of accounting standards, rules and procedures defined by the professional
accounting industry, which has been adopted by nearly all publicly traded U.S.
companies.
Securities Act of 1935 - CORRECT ANSWER Established the SEC Securities and
Exchange Commission with the explicit authority to establish the rules, standards, and
procedures used to account for transactions and events. Also to establish the form and
content of published financial reporting.
Management Accounting - CORRECT ANSWER Concerned with identification,
measurement, accumulation, analysis, preparation, interpretation, and communication
of financial information used my management to plan and evaluate and control within an
organization to assure appropriate use of and accountability of resources.
Cost Accounting - CORRECT ANSWER Concerned only with the cost of a product or
service.
Product Costs - CORRECT ANSWER Cost of the various products manufactured and
sold by a company. (Examples: Inventory Costs or Cost of Prodcution
Period Cost - CORRECT ANSWER ll costs incurred by a company that are not
considered product costs. (Examples: Administration Expenses or Selling Expenses)
Direct Costs - CORRECT ANSWER A cost that is easily traceable to the cost object
and is a result solely of the cost object. (Example: Lye used to make bars of soap.)
Indirect Cost - CORRECT ANSWER A cost that supports more than one cost objects,
and must be "allocated" to those various cost objects (Example: Electricity used at a
plant.)
Direct Material - CORRECT ANSWER Cost of materials used in production.
(Examples: sheet metal, tires, fabric, etc.)
Direct Labor - CORRECT ANSWER Cost of Labor used in production. (Example:
assembly line workers)
Manufacturing Overhead - CORRECT ANSWER Indirect factory-related costs that
are incurred when a product is manufactured. (Examples: facility costs, indirect labor,
machine set up costs, quality control, etc.)
Variable Costs - CORRECT ANSWER Expenses that vary directly with changes in
activity or changes in volume.
[QUESTIONS AND ANSWERS] WITH PRACTICE EXAM DETAILED AND
VERIFIED FOR GUARANTEED PASS- LATEST UPDATE 2025 GRADED
A
Save
Income Statement - CORRECT ANSWER Presents the results of the operations of
an entity over a peroid of time.
Includes: Revenues, Expenses, Income, Gains & Losses
Statement of Equity or Statement of Retained Earnings (Capital) - CORRECT
ANSWER Bridges the gap between the income statement and the balance sheet.
Arrangement depends on type of organization:
Proprietorship: Statement of Owners Equity
Partnership: Statement of Partners Equity
Corporation: Statement of Stockholders Equity
In addition, it contains: Investments by Owners and Distribution to owners
Statement of Cash Flows - CORRECT ANSWER Provides information about a
company's cash receipts and cash payments during a specific period of time.
Includes all 10 elements of financial statements: assets, liabilities, equity, net income,
income, gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to
Owners.
Cash Basis Accounting - CORRECT ANSWER Revenue is recognized in the
accounting period in which the associated cash is received and Expenses are
recognized in the accounting period that the cash is paid.
Accrual Basis Accounting - CORRECT ANSWER Revenue is recognized in the
accounting period in which the revenue is earned, regardless of when the associated
revenue is received. (Recorded when the sale is made, not when it is paid for.)
Depreciation - CORRECT ANSWER A method of allocating the cost of a tangible
asset over its useful life. Businesses depreciate long-term assets for both tax and
accounting purposes.
,Straight-Line Deprecation - CORRECT ANSWER Straight Line Depreciation -
(estimated value/useful life)
Equal amounts of depreciation expense are recorded in each period of the useful life of
the asset, if not disposed of prior to the end of estimated useful life.
The value is divided among estimated life of item.
Double Declining Balance Depreciation - CORRECT ANSWER Double Declining
Balance
An "accelerated" depreciation method (more expense is recorded in the early periods of
useful life and less in the later periods.)
Basic Inventory Equation for Goods - CORRECT ANSWER Beginning Inventory +
Purchases = Goods
Basic Inventory Equation for Cost of Goods Sold (COGS) - CORRECT ANSWER
Goods Available for Sale - Ending Inventory = Cost of Goods Sold (COGS)
Basic Inventory Equation for Ending Inventory - CORRECT ANSWER Beginning
Inventory + Purchases = Goods Available for Sale - Cost of Goods Sold (COGS) =
ending inventory
Periodic Inventory Accounting - CORRECT ANSWER No transactions are recorded
in the inventory account until the end of the accounting period. Merchandise purchases
are recorded in a purchases account.
Inventory is counted and costed at the end of each accounting period. The inventory
account beginning balance is adjusted to physical inventory amount and the difference
is added to or subtracted from periodic Cost of Goods Sold.
Perpetual Inventory Accounting - CORRECT ANSWER Merchandise purchases are
added to the inventory account when the merchandise is received.
Cost of Goods Sold is computed and subtracted from the inventory account as sales are
recorded.
FIFO (Inventory) - CORRECT ANSWER Inventory Oldest items inventory are sold
first .(Example: Fruit)
LIFO (Inventory) - CORRECT ANSWER Most recent items added to inventory are
sold first. (Example: Ore from Mining)
Average Cost (Inventory) - CORRECT ANSWER Ending inventory units are costed
using an average cost of goods available divided by the units available for sale.
(Example: Rope)
, Specific Identification (Inventory) - CORRECT ANSWER Inventory items are tagged
with their cost. (Example: automobiles)
Generally Accepted Accounting Principles (GAAP) - CORRECT ANSWER A
framework of accounting standards, rules and procedures defined by the professional
accounting industry, which has been adopted by nearly all publicly traded U.S.
companies.
Securities Act of 1935 - CORRECT ANSWER Established the SEC Securities and
Exchange Commission with the explicit authority to establish the rules, standards, and
procedures used to account for transactions and events. Also to establish the form and
content of published financial reporting.
Management Accounting - CORRECT ANSWER Concerned with identification,
measurement, accumulation, analysis, preparation, interpretation, and communication
of financial information used my management to plan and evaluate and control within an
organization to assure appropriate use of and accountability of resources.
Cost Accounting - CORRECT ANSWER Concerned only with the cost of a product or
service.
Product Costs - CORRECT ANSWER Cost of the various products manufactured and
sold by a company. (Examples: Inventory Costs or Cost of Prodcution
Period Cost - CORRECT ANSWER ll costs incurred by a company that are not
considered product costs. (Examples: Administration Expenses or Selling Expenses)
Direct Costs - CORRECT ANSWER A cost that is easily traceable to the cost object
and is a result solely of the cost object. (Example: Lye used to make bars of soap.)
Indirect Cost - CORRECT ANSWER A cost that supports more than one cost objects,
and must be "allocated" to those various cost objects (Example: Electricity used at a
plant.)
Direct Material - CORRECT ANSWER Cost of materials used in production.
(Examples: sheet metal, tires, fabric, etc.)
Direct Labor - CORRECT ANSWER Cost of Labor used in production. (Example:
assembly line workers)
Manufacturing Overhead - CORRECT ANSWER Indirect factory-related costs that
are incurred when a product is manufactured. (Examples: facility costs, indirect labor,
machine set up costs, quality control, etc.)
Variable Costs - CORRECT ANSWER Expenses that vary directly with changes in
activity or changes in volume.
