PRAXIS 5101 TESTBANK CURRENT TESTING
VERSIONS CERTIFICATION REVIEW SET
2026 ANSWERS GUARANTEED PASS
⫸ Different types of assets. Answer: Fixed, variable, intangible,
tangible
⫸ examples of fixed assets. Answer: Tangible assets used to generate
profit and will not be turned into cash within the year: "plant," land,
computer equipment, furniture, cars, buildings, and equipment used to
make products
⫸ What are variable assets. Answer: May be transformed to cash
sooner; inventory of product and accounts receivable
⫸ What are intangible assets?. Answer: Not physical-brand names,
intellectual property- are high in value
⫸ What is liquidity?. Answer: How easy it is to turn an item into cash
without losing any money
⫸ What is equity?. Answer: In business, it shows what the owner has
contributed in addition to retained earnings; ownership minus debts
,⫸ What is depreciation?. Answer: Loss of value for any reason.
⫸ What is cash flow?. Answer: the total amount of money being
transferred into and out of a business; revenues and/or expenses
⫸ What is GAAP?. Answer: Generally accepted accounting principles.
A set of rules and practices, having substantial authortitative support,
that accounting profession recognizes as a general guideline for a
financial reporting purposes; standardized how income statements,
balance sheets, and cash flow statements are prepared
⫸ How is GAAP used for investors?. Answer: So investors understand
what they are getting when they receive statements
⫸ What does GAAP standardize/cover?. Answer: Economic activity
measurement, timing disclosures, and how financial statements are
prepared and presented.
⫸ Who requires GAAP?. Answer: Companies regulated by the US
Securities and Exchange Commission (SEC)
⫸ Who issues GAAP through pronouncements?. Answer: Financial
Accounting Standards Board (FASB)
, ⫸ Two major types of accounting systems. Answer: Cash and accrual
accounting
⫸ What does cash accounting entail?. Answer: Transactions are counted
when money is actually received or the expenses are paid out.
⫸ What does accrual accounting entail?. Answer: Transactions are
counted when orders are made or delivered-even if no cash has been
exchanged.
⫸ How does cash and accrual accounting affects taxes?. Answer: If an
item is purchased in delivered in one month (accrual), but paid for in
another month (cash), this affects where it is recorded for tax purposes.
⫸ How does cash and accrual accounting differ?. Answer: Cash
accounting is more advantageous as it gives the business a better idea of
cash on hand, but may not show correct profits; however, accrual
accounting will show correct profits, but won't reflect actual cash flow.
⫸ Fundamental Accounting Equation. Answer: Assets = Liabilities +
Owners' equity; this is the basis for the balance sheet
⫸ What is the accounting cycle?. Answer: The accounting cycle
describes the steps in the accounting process.
VERSIONS CERTIFICATION REVIEW SET
2026 ANSWERS GUARANTEED PASS
⫸ Different types of assets. Answer: Fixed, variable, intangible,
tangible
⫸ examples of fixed assets. Answer: Tangible assets used to generate
profit and will not be turned into cash within the year: "plant," land,
computer equipment, furniture, cars, buildings, and equipment used to
make products
⫸ What are variable assets. Answer: May be transformed to cash
sooner; inventory of product and accounts receivable
⫸ What are intangible assets?. Answer: Not physical-brand names,
intellectual property- are high in value
⫸ What is liquidity?. Answer: How easy it is to turn an item into cash
without losing any money
⫸ What is equity?. Answer: In business, it shows what the owner has
contributed in addition to retained earnings; ownership minus debts
,⫸ What is depreciation?. Answer: Loss of value for any reason.
⫸ What is cash flow?. Answer: the total amount of money being
transferred into and out of a business; revenues and/or expenses
⫸ What is GAAP?. Answer: Generally accepted accounting principles.
A set of rules and practices, having substantial authortitative support,
that accounting profession recognizes as a general guideline for a
financial reporting purposes; standardized how income statements,
balance sheets, and cash flow statements are prepared
⫸ How is GAAP used for investors?. Answer: So investors understand
what they are getting when they receive statements
⫸ What does GAAP standardize/cover?. Answer: Economic activity
measurement, timing disclosures, and how financial statements are
prepared and presented.
⫸ Who requires GAAP?. Answer: Companies regulated by the US
Securities and Exchange Commission (SEC)
⫸ Who issues GAAP through pronouncements?. Answer: Financial
Accounting Standards Board (FASB)
, ⫸ Two major types of accounting systems. Answer: Cash and accrual
accounting
⫸ What does cash accounting entail?. Answer: Transactions are counted
when money is actually received or the expenses are paid out.
⫸ What does accrual accounting entail?. Answer: Transactions are
counted when orders are made or delivered-even if no cash has been
exchanged.
⫸ How does cash and accrual accounting affects taxes?. Answer: If an
item is purchased in delivered in one month (accrual), but paid for in
another month (cash), this affects where it is recorded for tax purposes.
⫸ How does cash and accrual accounting differ?. Answer: Cash
accounting is more advantageous as it gives the business a better idea of
cash on hand, but may not show correct profits; however, accrual
accounting will show correct profits, but won't reflect actual cash flow.
⫸ Fundamental Accounting Equation. Answer: Assets = Liabilities +
Owners' equity; this is the basis for the balance sheet
⫸ What is the accounting cycle?. Answer: The accounting cycle
describes the steps in the accounting process.
