ACCOUNTING ACTUAL TEST PAPER
QUESTIONS AND ANSWERS GRADED A+
●● Cost
Answer: the amount of resources that a company sacrifices to obtain
goods or services; often said to be incurred when the company pays cash
or uses credit to acquire the item
●● Revenue Recognition Principle
Answer: revenues are reported when goods or services are delivered,
there is evidence of an arrangement for customer payment, the price is
fixed or determinable, and collection is reasonably assured
●● Expense Recognition Principle
Answer: expenses are recorded when incurred in earning revenue; also
called "matching"
●● Accrual Basis Accounting
Answer: records revenues when they are earned and expenses in the
same period as the revenues to which they relate, regardless of the
timing of cash receipts or payments
●● Adjusting Journal Entries
, Answer: entries necessary at the end of each accounting period to
measure all revenues and expenses of that period
●● Contra Account
Answer: an account that is an offset to, or reduction of, another account
●● Carrying Value
Answer: the amount at which an asset or liability is reported ("carried")
in the financial statements; also known as "net book value" or "book
value"
●● Dividends
Answer: the distribution of a company's earnings to its stockholders' as a
return on their investment; not an expense!
●● Permanent Accounts
Answer: accounts that track financial results from year to year by
carrying their ending balances into the next year
●● Temporary Accounts
Answer: accounts that track financial results for a limited period of time
by having their balances zeroed out at the end of each accounting year
●● T-accounts
QUESTIONS AND ANSWERS GRADED A+
●● Cost
Answer: the amount of resources that a company sacrifices to obtain
goods or services; often said to be incurred when the company pays cash
or uses credit to acquire the item
●● Revenue Recognition Principle
Answer: revenues are reported when goods or services are delivered,
there is evidence of an arrangement for customer payment, the price is
fixed or determinable, and collection is reasonably assured
●● Expense Recognition Principle
Answer: expenses are recorded when incurred in earning revenue; also
called "matching"
●● Accrual Basis Accounting
Answer: records revenues when they are earned and expenses in the
same period as the revenues to which they relate, regardless of the
timing of cash receipts or payments
●● Adjusting Journal Entries
, Answer: entries necessary at the end of each accounting period to
measure all revenues and expenses of that period
●● Contra Account
Answer: an account that is an offset to, or reduction of, another account
●● Carrying Value
Answer: the amount at which an asset or liability is reported ("carried")
in the financial statements; also known as "net book value" or "book
value"
●● Dividends
Answer: the distribution of a company's earnings to its stockholders' as a
return on their investment; not an expense!
●● Permanent Accounts
Answer: accounts that track financial results from year to year by
carrying their ending balances into the next year
●● Temporary Accounts
Answer: accounts that track financial results for a limited period of time
by having their balances zeroed out at the end of each accounting year
●● T-accounts
