ETS - MFT Accounting Overview Test Questions And 100%
Correct Answers
Accural Accounting - ANSWER : Expenses are recognized when the economic benefit is
received and revenue is recognized as it is earned. The two are matched to determine
net income for the period.
Accumulated Depreciation - ANSWER An account that shows the total amount of
depreciation that the company has expensed thus far in the asset's life.
Adjusting Entries - ANSWER Deferrals and Prepaids: The payment is received or paid in
advance of the recognition of the revenue or expense.
Cash Accounting - ANSWER Revenue is recognized in the period in which the related
cash collection is made and expenses are reported in the period when the cash
disbursements are made.
Dividends A corporation's distribution of profits to stockholders in the form of cash or
stock coming out of Retained Earnings.
Journal All transactions and events are FIRST recorded in a journal in chronological
order with equal amounts of debits and credits to various accounts.
Special Journal Records similar transactions, such as all cash receipts or all cash
payments.
General Ledger - ANSWER It is the summary record of transactions entered in the
journal. Accounts are listed in financial statement order: Assets, liabilities, owner's
equity, revenues and expenses.
, Subsidiary Ledger - ANSWER Details maintained to support the balance in some general
ledger account, such as accounts receivable.
Trial Balance - ANSWER A complete listing of every ledger account with either a debit or
credit balance which is done to verify the equality of the debits and credits.
Retained Earnings - ANSWER It is that portion of the stockholders' equity attributable to
profitable operations, and it is equal to the aggregate of net income minus any net
losses and dividends since the inception of the business. It does not represent cash or
funds.
FOB Destination - ANSWER Title passes to the purchaser when the goods are unloaded
from the common carrier and the seller bears the transportation charges.
FOB Shipping Point - ANSWER Title passes to the purchaser when the goods are loaded
onto the common carrier and the purchaser bears the transportation charges.
Property, Plant, & Equipment - ANSWER Assets with a relatively long life which are used
in the operation of the business and are not intended for sale in the ordinary course of
business.
Working Capital - ANSWER It is the excess of current assets over current liabilities.
Contingent Liability - ANSWER It is a potential liability that may become an actual
liability in the future based upon some past event.
Owners Equity - ANSWER It is the excess of the assets minus liabilities of a business.
Revenue - ANSWER Inflow or increase of assets or decrease of liabilities due to
customers or clients, resulting from sales of merchandise or the performance of
services (or from investments).
Correct Answers
Accural Accounting - ANSWER : Expenses are recognized when the economic benefit is
received and revenue is recognized as it is earned. The two are matched to determine
net income for the period.
Accumulated Depreciation - ANSWER An account that shows the total amount of
depreciation that the company has expensed thus far in the asset's life.
Adjusting Entries - ANSWER Deferrals and Prepaids: The payment is received or paid in
advance of the recognition of the revenue or expense.
Cash Accounting - ANSWER Revenue is recognized in the period in which the related
cash collection is made and expenses are reported in the period when the cash
disbursements are made.
Dividends A corporation's distribution of profits to stockholders in the form of cash or
stock coming out of Retained Earnings.
Journal All transactions and events are FIRST recorded in a journal in chronological
order with equal amounts of debits and credits to various accounts.
Special Journal Records similar transactions, such as all cash receipts or all cash
payments.
General Ledger - ANSWER It is the summary record of transactions entered in the
journal. Accounts are listed in financial statement order: Assets, liabilities, owner's
equity, revenues and expenses.
, Subsidiary Ledger - ANSWER Details maintained to support the balance in some general
ledger account, such as accounts receivable.
Trial Balance - ANSWER A complete listing of every ledger account with either a debit or
credit balance which is done to verify the equality of the debits and credits.
Retained Earnings - ANSWER It is that portion of the stockholders' equity attributable to
profitable operations, and it is equal to the aggregate of net income minus any net
losses and dividends since the inception of the business. It does not represent cash or
funds.
FOB Destination - ANSWER Title passes to the purchaser when the goods are unloaded
from the common carrier and the seller bears the transportation charges.
FOB Shipping Point - ANSWER Title passes to the purchaser when the goods are loaded
onto the common carrier and the purchaser bears the transportation charges.
Property, Plant, & Equipment - ANSWER Assets with a relatively long life which are used
in the operation of the business and are not intended for sale in the ordinary course of
business.
Working Capital - ANSWER It is the excess of current assets over current liabilities.
Contingent Liability - ANSWER It is a potential liability that may become an actual
liability in the future based upon some past event.
Owners Equity - ANSWER It is the excess of the assets minus liabilities of a business.
Revenue - ANSWER Inflow or increase of assets or decrease of liabilities due to
customers or clients, resulting from sales of merchandise or the performance of
services (or from investments).
