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Bookkeeping basics > Bookkeeping basics > Flashcards

Bookkeeping basics Flashcards

1
Q

True or False:​ Journal entries require a good understanding of debits and credits.

A

True

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2
Q

When would it be acceptable to use Manual Journal entries to hide or disguise certain financial transactions?

A

Never

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3
Q

True or False:​ Journal entries should not be used during year-end adjustments.

A

False

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4
Q

Who should decide what to manually enter into general journal entries?

A

Accountant

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5
Q

True or False:​ Journal entries should not be used to enter depreciation.

A

False

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6
Q

What are the six steps in the accounting cycle?

A

Collect and analyze transactions

Record/Post transactions to the ledger

Prepare an unadjusted trial balance

Prepare adjusting entries at the end of the period

Prepare an adjusted trial balance

Prepare Financial Statements.

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7
Q

What is a general ledger?

A

A set of numbered accounts a business uses to keep track of its financial transactions and to prepare financial reports. Each account is a unique record summarizing a specific type of asset, liability, equity, revenue or expense.

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8
Q

What is posting to the ledger?

A

Reorganization of all the journal entries and grouping like items together. Like assets starting at 101 being assets and ending with 606 being expenses.

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9
Q

What is step one in the accounting process?

A

Collect and analyze transactions.

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10
Q

What is step two in the accounting process?

A

Record/Post transactions to the ledger

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11
Q

What is step three in the accounting process?

A

Prepare an unadjusted trial balance

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12
Q

What is step four in the accounting process?

A

Prepare adjusting entries at the end of the period

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13
Q

What is step five in the accounting process?

A

Prepare an adjusted trial balance

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14
Q

What is step 6 in the accounting process?

A

Prepare Financial Statements.

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15
Q

A numbered list that contains all accounts needed to prepare financial statements is known as?

A

The General Ledger

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16
Q

Reorganizing journal entries and grouping them by account is known as?

A

P​osting to the ledger

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17
Q

To find the balance of the account types that increase with a debit (asset and expense accounts), bookkeepers will?

A

Subtract total credits from total debits (Debits - Credits)

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18
Q

The accounting cycle starts with the?

A

Analysis of business transactions

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19
Q

After analysis, the business transaction is recorded in the journal in

A

Chronological order

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20
Q

The names of ALL ACCOUNTS that a company has identified and made available for recording transactions in its general ledger is known as a:

A

C​hart of Accounts

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21
Q

A form or statement that lists the titles and balances of all ledger accounts at a given date is known as:

A

Trial balance

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22
Q

Sydney is entering a transaction in QuickBooks. What are the two steps of manual accounting that will happen simultaneously as she does this?

A

Creating a journal entry and posting to the ledger

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23
Q

The digits of the account numbers assigned to general ledger accounts often have significance. For example, an account number beginning with a “1” might signify that the account is an asset account, a “6” might signify an operating expense, etc.

A

True

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24
Q

A trial balance where total debits equal total credits indicates:

A

The ledger is in balance.

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25
Q

Zach needs to determine what his company’s financial position was on March
31st of last year. Where should he look?

A

B​alance sheet

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26
Q

Which of the following financial statements reports the sources and uses of cash by a business?

A

S​tatement of Cash Flow

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27
Q

This lists general ledger account balances at the end of a reporting period, before any adjusting entries are made?

A

Unadjusted Trial Balance

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28
Q

A trial balance that is prepared after taking into account all the adjusting entries is known as:

A

Adjusted Trial Balance

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29
Q

The preparation of financial statements and closing the books is the ______ step of the accounting cycle.

A

last

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30
Q

Rudiger has just recorded and posted his business transactions to the ledger.
His next step in the accounting cycle is to _______.

A

prepare an unadjusted trial balance

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31
Q

Francis enters a $100 check received from a customer into QuickBooks online. If she views the Transaction Journal, which account would show as being
debited $100?

A

Business bank account

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32
Q

The double-entry system of bookkeeping normally results in which of the following balances in the ledger accounts?

A

Debit: Assets and expenses

Credit: Liabilities, equity, and revenue

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33
Q

In the first month of operations, Pepper Consulting’s total debit entries to the cash account amounted to $900, and the total credit entries to the cash account amounted to $600. The cash account has a:

A

$300 debit balance

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34
Q

Pepper Consulting bought computers with credit from PYO Suppliers and entered the purchase into QuickBooks. The transaction journal for Pepper Consulting would show the following entry:

A

Debit: Computers

Credit: PYO Credit Payable

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35
Q

True or False: The difference between a sales receipt and an invoice is whether or not the customer pays at the time of the sale or service.

A

True

36
Q

What is the “undeposited funds” account?

A

A temporary account that holds payments you plan to deposit later.​

37
Q

When would the undeposited funds feature not be necessary?

A

When you’ve already deposited the funds during the receive payment process.

38
Q

What is a deferral?

A

Deferrals remove transactions that belong to a different time period. Example: Paid upfront but the job hasn’t been completed yet.

39
Q

What is an accrual?

A

Accruals are the opposite of deferrals. They concern the future payment or expenses. Example: Did a job for a customer but havent paid YOU yet.

40
Q

What is a Missing Transaction?

A

Transaction that slips through the cracks and is not recorded right away.

41
Q

What is a tax adjustment?

A

Tax adjustments usually happen once a year and are related to tax filings. Example: File a tax return and discovered he received a tax credit. The credit was then posted to his book as an adjustment.

42
Q

True or False: It is always the bookkeeper’s responsibility to identify the need for adjusting journal entries.

A

False

43
Q

True or False:​ Once the adjusted trial balance has been prepared, it’s time to create the financial statements.​

A

True

44
Q

If you’re increasing an Interest Expense account, you _____ it.

A

Debit

45
Q

Which report includes the assets, liabilities, and owner’s equity on a specific date?

A

The Balance Sheet

46
Q

Which report provides a summary of changes in an owner’s equity?

A

The Statement of Equity

47
Q

Which report provides a summary of cash movement over a specific time period?

A

The Cash Flow Statement.

48
Q

Which report is used to calculate net income?

A

The Income Statement

49
Q

Which of the following financial statements provides a summary of a company’s revenue and expenses over a period of time?

A

The Income Statement

50
Q

Question 2
Which of the following financial statements provides you with the owner’s change in capital over time?

A

The Statement of Equity

51
Q

Which of the following financial statements shows the balances of a company’s assets, equity, and liability?

A

The Balance Sheet

52
Q

Which of the following financial statements provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investments?

A

The Statement of Cash Flow

53
Q

A seasonal business like Lou’s Landscaping can have decreased cash during off-season months. Which financial statement would show the cash inflows and outflows for a particular month?

A

Cash Flow Statement

54
Q

Which of these accounts would have a balance of $0 at the beginning of each new accounting period?

A

R​evenue

55
Q

A business owner performs a service and is paid when the job is completed. The owner would then enter this transaction into accounting software as

A

A Sales Receipt

56
Q

A business owner performs a service but is not paid when the job is performed. Using their accounting software, the owner would enter the transaction as:

A

An Invoice

57
Q

True or False: The ending cash balance on the Statement of Cash Flow should
not equal the cash balance reported on the Balance Sheet.

A

F​alse

58
Q

A customer paid in advance for a service. They need to cancel the service. If the business owner wishes to apply that money towards the customer’s next service, the owner would enter that transaction into their accounting software as:

A

A Credit Memo

59
Q

True or False: In order to complete a Statement of Equity, you will need the net profit from the Income Statement.

A

True

60
Q

True or False: Business owners should use the General Ledger to make business decisions.

A

False

61
Q

A Balance Sheet has four parts: a heading, assets, liabilities, and ______.

A

equity

62
Q

True or False: Financial reports should be produced before any adjustments have been made.

A

False

63
Q

An owner has deposited several payments they’ve received from customers into the business’s bank account. The owner would then enter this transaction in their accounting software as:

A

A Bank Deposit

64
Q

After the Unadjusted Trial Balance is created, the process of going back and updating information is known as:

A

Making adjustments

65
Q

A business owner had a piece of equipment serviced and paid for the repair with a check. The owner would then enter the transaction into their accounting software as:

A

A Vendor Check

66
Q

The document that shows all of the account balances after adjustments have been made is known as:

A

The Adjusted Trial Balance

67
Q

Becky provided a service to a customer, and they have yet to pay. Which type of journal entry would need to be made?

A

An Accrual

68
Q

True or False: The depreciation of a vehicle is not something that can be entered as an adjustment.

A

False

69
Q

This type of assumption/principle requires a business to disclose all information about the business that is important for a lender or investor to know in financial statements in the financial statement notes.

A

Full Disclosure Principle

70
Q

The Economic Entity Assumption states:

A

Business and personal financial activities must be separate for business owners.

71
Q

When the bookkeeper or accountant has a choice between two acceptable alternatives, they should choose the one that will report less profit, less asset amount, or a greater liability amount. This is based upon which assumption/principle?

A

Conservatism Assumption

72
Q

Your client Rosie Fern wants to add the cost of the trellises she built for her herbal gardening business but can’t find a receipt or proof that she paid.

A

The Reliability Assumption

73
Q

When a bookkeeper is using the US dollar as currency in accounting and is not considering changes in the value of that currency she is employing the:

A

Monetary Unit Assumption

74
Q

This assumption / principle is very subjective and should be used with caution outside of rounding to the nearest dollar when entering financial information.

A

Materiality Principle

75
Q

A company is considered a Going Concern when it:

A

Is stable, able to operate and able to meet its financial obligations.

76
Q

Cecilia Tubular sells 1980s themed enamel pins. She has a huge inventory she purchased in 1984 at $0.10 each. They are now worth $1 each. According to the Monetary Unit Assumption, you:

A

Keep the value of the pins at $0.10 each.

77
Q

If a business is using the Consistency Principle they will:

A

Adopt a specific accounting method and will enter all similar items in the exact same way in the future.

78
Q

True or False: According to the Periodicity Assumption, companies can only
review their financial health at the end of their fiscal year?

A

False

79
Q

A client owns a small vinyl sign printing company called Printing Pros. They completed a print job for a customer on August 10, but the customer did not pay for the service until October 15.

In which month should the revenue be recognized for this big print job?

A

A​ugust

80
Q

P​rinting Pros had another big job to do in April and needed to hire additional help to make their deadline. The new employee received their first paycheck at the beginning of May.

When should Printing Pros recognize the expense of paying their employee?

A

April

81
Q

According to the Revenue Recognition Principle, when should a business recognize its revenue?

A

When it is earned.

82
Q

Which of the following best describes the Periodicity Assumption?

A

Companies can assume that business activity can be broken up into smaller measurements of time.

83
Q

Which of the following statements would best describe the Matching Principle?

A

Expenses like manufacturing costs or depreciation should be recognized in the same period as the revenue it helped generate.

84
Q

According to the Cash-Basis accounting method, when would a business recognize its expenses?

A

When the expense is paid out

85
Q

True or False: An advantage of using the Accrual Method of accounting is that it provides a fuller picture of the state of the business.

A

True

86
Q

It is permissible to use a combination of the Cash-Basis and Accrual methods of accounting as long as it is applied consistently and clearly and reflects the business’s income and expenses.

A

True

Bookkeeping basics (2 decks)

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