Accounting Vocab

What is a checking account?

• A bank account for receiving wire transfers
• A bank account for investing in stocks
• A bank account for ordering payments
• A bank account for saving money

What is the purpose of a debit card?

• To withdraw cash from an ATM
• To transfer funds between accounts
• To deposit money into a checking account
• To automatically deduct the amount of a purchase from the checking account

What is the difference between a credit and a debit in accounting?

• A credit increases assets and decreases liabilities, while a debit decreases assets and increases liabilities
• A credit decreases assets and increases liabilities, while a debit increases assets and decreases liabilities
• A credit increases assets and decreases owner's equity, while a debit decreases assets and increases owner's equity
• A credit decreases assets and increases owner's equity, while a debit increases assets and decreases owner's equity

What is a petty cash slip?

• A form showing proof of a petty cash payment
• A form for depositing money into a petty cash fund
• A form for withdrawing money from a petty cash fund
• A form for transferring funds to a petty cash fund

What is the difference between cash basis accounting and accrual basis accounting?

• Cash basis accounting is more accurate than accrual basis accounting
• Cash basis accounting records revenues and expenses when cash is received or paid, while accrual basis accounting records revenues and expenses when they are earned or incurred
• Cash basis accounting is used by large corporations, while accrual basis accounting is used by small businesses
• Cash basis accounting records revenues and expenses when they are earned or incurred, while accrual basis accounting records revenues and expenses when cash is received or paid

What is the purpose of the cost of goods sold (COGS) in accounting?

• To calculate the net income of a company
• To calculate the value of a company's inventory
• To calculate the total expenses of a company
• To calculate the cost of producing or purchasing the products that a company sells

What is an electronic funds transfer?

• A manual cash payments system
• A computerized cash payments system
• A paper-based cash payments system
• A phone-based cash payments system

What is the purpose of the statement of cash flows?

• To report the sources and uses of cash during a period
• To report the financial position of a company at a specific point in time
• To report the revenues and expenses of a company
• To report the financial performance of a company over a period of time

What is the difference between a balance sheet and an income statement?

• A balance sheet includes assets and liabilities, while an income statement includes revenues and expenses
• A balance sheet includes revenues and expenses, while an income statement includes assets and liabilities
• A balance sheet reports financial performance over a period of time, while an income statement reports financial position at a specific point in time
• A balance sheet reports financial position at a specific point in time, while an income statement reports financial performance over a period of time

What is a dishonored check?

• A check that a bank refuses to pay
• A check that a bank accepts and processes
• A check that is post-dated
• A check that is endorsed by the payee