Can You Pass This Basic Finance Assistant Test?

2.

What balance sheet formal is verticle?

Standard
Report
Account
Inverted

Correct Answer

A. Report

Explanation

The correct answer is "Report". A vertical balance sheet format is a type of financial statement that presents the assets, liabilities, and equity of a company in a vertical columnar format. In this format, the assets are listed on the left side, followed by the liabilities and equity on the right side. This format is commonly used in financial reporting to provide a clear and organized presentation of a company's financial position.

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36

3.

Income statement format that separates the cost of goods sold into categories?

Standard
Detailed
Expanded
Multi-Step

Correct Answer

A. Multi-Step

Explanation

The multi-step income statement format separates the cost of goods sold into categories. This format provides a more detailed and comprehensive view of the company's financial performance by breaking down the cost of goods sold into different categories, such as direct materials, direct labor, and overhead expenses. This allows for better analysis and understanding of the company's cost structure and profitability.

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25

4.

Which is not a cash activity listed on the cash flow statement?

Operating activities
Investing activities
Purchasing activities
Financing activities

Correct Answer

A. Purchasing activities

Explanation

Purchasing activities is not a cash activity listed on the cash flow statement because it refers to the process of acquiring goods or services for a business, which involves the use of cash or other forms of payment. However, the cash flow statement focuses on the movement of cash in and out of the business, specifically related to operating, investing, and financing activities. Purchasing activities are typically included under operating activities, as they represent the day-to-day transactions of the business.

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13

5.

Earnings per share show investors the __________ earned per outstanding share of stock.

Operating Income
Income before taxes
Net Income
Income before interest and taxes

Correct Answer

A. Net Income

Explanation

Earnings per share is a financial metric that indicates the amount of profit generated by a company for each outstanding share of stock. It is calculated by dividing the net income (profit after taxes and interest) by the number of outstanding shares. Therefore, net income is the correct answer as it represents the total profit earned by the company, which is then divided by the number of shares to determine the earnings per share.

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9

6.

After a business transaction has occurred, journal entries are recorded in the:

General Ledger
General Journal
Expense Accounts
Balance Sheets

Correct Answer

A. General Journal

Explanation

After a business transaction has occurred, journal entries are recorded in the General Journal. The General Journal is a chronological record of all the transactions that have taken place in a business. It is used to initially record the details of the transactions before they are transferred to the General Ledger. The General Journal provides a complete and organized record of all the financial transactions, making it easier for accountants to analyze and prepare financial statements. The other options, such as the General Ledger, Expense Accounts, and Balance Sheets, are not the correct answer as they are not the primary place where journal entries are recorded.

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6

7.

Which trial balance lists all the business accounts before year-end adjusting journal entries are made.

Adjusted Trial Balance
Unadjusted Trial Balance
Post Closing Trial Balance
Pre Closing Trial Balance

Correct Answer

A. Unadjusted Trial Balance

Explanation

The unadjusted trial balance lists all the business accounts before year-end adjusting journal entries are made. This trial balance is prepared to ensure that the debits and credits in the general ledger are equal and to serve as a starting point for making adjusting entries. It includes all the accounts and their balances without any adjustments made for accruals, deferrals, or other adjustments.

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7

8.

Entries that are made at the end of a period to correct accounts before financial statements are prepared.

Closing entries
Adjusting entries
Reversing entries
Journal entries

Correct Answer

A. Adjusting entries

Explanation

Adjusting entries are made at the end of a period to correct accounts before financial statements are prepared. These entries ensure that revenues and expenses are properly recognized in the correct accounting period. They also update asset and liability accounts to reflect their correct balances. Adjusting entries are important for accurately reporting financial information and ensuring that the financial statements provide a true and fair view of the company's financial position and performance.

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8

9.

The assumption that states that businesses can divide up their activities into artificial time periods.

Business entity concept
Going concern concept
Monetary unit assumption
Periodicity assumption

Correct Answer

A. Periodicity assumption

Explanation

The periodicity assumption states that businesses can divide up their activities into artificial time periods. This assumption allows businesses to prepare financial statements at regular intervals, such as monthly, quarterly, or annually, to provide useful information to users. It helps in measuring and reporting the financial performance and position of the business over a specific period, facilitating comparisons and analysis.

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9

10.

Which of these is not included as a separate item in the basic accounting equation?

Assets
Revenue
Liabilities
Stockholder's equity

Correct Answer

A. Revenue

Explanation

Revenue is not included as a separate item in the basic accounting equation. The basic accounting equation states that Assets = Liabilities + Stockholder's equity. Revenue is not a separate item in this equation because it is considered a component of stockholder's equity. Revenue represents the inflow of assets (such as cash or accounts receivable) resulting from the sale of goods or services, and it increases stockholder's equity. Therefore, revenue is not listed as a separate item in the equation.

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12

Can You Pass This Basic Finance Assistant Test?

What financial statement lists assets from current to long term?

Quiz Preview

What balance sheet formal is verticle?

Income statement format that separates the cost of goods sold into categories?

Which is not a cash activity listed on the cash flow statement?

Earnings per share show investors the __________ earned per outstanding share of stock.

After a business transaction has occurred, journal entries are recorded in the:

Which trial balance lists all the business accounts before year-end adjusting journal entries are made.

Entries that are made at the end of a period to correct accounts before financial statements are prepared.

The assumption that states that businesses can divide up their activities into artificial time periods.

Which of these is not included as a separate item in the basic accounting equation?