WebXam Review - Fundamental Accounting - 5 - Financial Acct

Which of the following is a key accounting concept forming the basis for systems compliant with Generally Accepted Accounting Principles (GAAP)?

• Financial forecasting

• Inventory management

• Accounting cycle

• Market analysis

What is the purpose of a Generally Accepted Accounting Principles (GAAP)-compliant chart of accounts?

• To provide detailed information about competitors

• To support other managerial objectives such as cost center reporting

• To predict future market trends

• To track employee attendance

What are the components of the accounting equation?

• Assets, liabilities, and net profit

• Assets, liabilities, and equity

• Revenue, expenses, and net income

• Income, expenses, and retained earnings

How are standard business transactions recorded in the general ledger?

• Using only reconciliation rules

• Using journals and reconciliation rules

• Using only journals

• Using only the trial balance

Which entries are recorded to close temporary accounts at the end of an accounting period?

• Adjusting entries

• Closing entries

• Post-closing correcting entries

• Reversing entries

How are asset and liability accounts classified?

• Into debit and credit categories

• Into current and non-current categories

• Into equity and expense categories

• Into revenue and liability categories

What does managing accounting processes in accordance with organizational policies and procedures involve?

• Ignoring accounting standards

• Only managing payroll expenses

• Only managing inventory usage valuation

• Adhering to accounting standards and organizational policies and procedures

What is the purpose of a trial balance?

• To balance the equity accounts

• To record and balance adjusting entries

• To determine if the general ledger is in balance

• To balance cash transactions

Which method is used to calculate the value of inventory and cost of goods sold based on the assumption that items sold or used are the most recently acquired?

• FIFO (First In, First Out)

• LIFO (Last In, First Out)

• Average Cost

• Lower of Cost or Market

How are uncollectible accounts handled using the allowance method?

• They are written off directly from the accounts receivable

• They are ignored in financial statements

• They are recorded as expenses

• They are reported as income