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Test your accounting skills with this short quiz on Fundamental Accounting Concepts, under the Accounting Basics tutorials.

Instructions: For each item, write down what is required on a piece of paper. You can check your answers later.

A. Identification / Fill in the Blanks

1. Under the accrual basis of accounting, income is recognized when __________ regardless of when _______; expenses are recognized when _______ regardless of when ________.
2. It refers to the assumption than an entity will exist indefinitely in the absence of evidences that suggest otherwise.
3. It means that the indefinite life of an entity is subdivided in equal periods.
4. __________ refers to a 12-month period ending in December 31.
5. __________ refers to a 12-month period ending in any month.
6. It means that a specific business enterprise is considered one accounting entity, separate and distinct from its owners.
7. What are the two characteristics of the monetary unit assumption?
8. The ________________ states that expenses are recognized in the period the related revenues are earned.

B. Indicate whether the account given is Asset, Liability, Capital, Income or Expense.

C. Indicate whether the account is a Current Asset (CA), Non-Current Asset (NCA), Current Liability (CL), or Non-Current Liability (NCL).

D. Case Problem: The following accounts pertain to the records of Sharkbait Company at the end of the accounting period:

The company started the year with $800,000 Capital. The owner made $100,000 cash withdrawals during the year. How much is the total liabilities at the end of the period?

E. Accounting Process. Enumerate the 9 steps of the accounting process. Write them in the proper order. Yes, it would be better if you know the process before we go into the details of each step. ;)

Fundamental Accounting Concepts: Table of Contents

Next Tutorial Series:
The Financial Statements