Financial Accounting MP1 Quarterly Review

Under accrual accounting, when is revenue typically recorded?

• When cash is collected

• When the service is completed

• When the invoice is sent

• When the order is placed

What is the purpose of a chart of accounts?

• To summarize financial transactions

• To provide a detailed list of all accounts used by a business

• To replace the general journal

• To serve as a financial statement

What is the term for recording transactions in the ledger from the journal?

• Balancing

• Journalizing

• Posting

• Transposing

Which category does prepaid rent fall under?

• Asset

• Liability

• Stockholders’ Equity

• Revenue

• Expense

What type of account is unearned revenue?

• Asset

• Liability

• Stockholders’ Equity

• Revenue

• Expense

Which financial statement provides a snapshot of a company's financial position at a specific point in time?

• Balance sheet

• Cash flow statement

• Income statement

• Statement of changes in equity

Which of the following is indicated by a debit entry?

• Increase in an expense account

• Decrease in a liability account

• Increase in a revenue account

• Increase in the retained earnings account

A debit to a liability account will increase the account balance.

• True

• False

In the accounting equation, assets minus liabilities equals:

• Owner's Equity

• Net Income

What is a business structure called where ownership is divided into shares and it operates as a separate legal entity?

• Proprietorship

• Service business

• Partnership

• Corporation