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Quiz: Fundamental Accounting Concepts

Instructions

Test your accounting skills with this short quiz on Fundamental Accounting Concepts under the Accounting 101: Basics tutorial series.

For each item below, write down what is required on a piece of paper. You can check your answers later through the link at the end of the quiz.

A. Identify the following

  1. Under the accrual basis of accounting, income is recognized when ______ regardless of when _________; and 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 into equal periods.
  1. _____________ refers to a 12-month period ending in December 31.
  2. ___________ refers to a 12-month period ending in any month other than December.
  3. It means that a specific business enterprise is considered one accounting entity, separate and distinct from its owners.
  4. What are the two characteristics of the monetary unit assumption?
  5. The __________________ states that expenses are recognized in the period the related revenues are earned.

B. Determine if the given is a/n Asset, Liability, Capital, Income or Expense.

  1. Prepaid Insurance
  2. Light and Water
  3. Employees' Salaries
  4. Accounts Payable
  5. Mr. Bruno, Capital
  1. Accounts Receivable
  2. Service Revenue
  3. Service Equipment
  4. Bonds Payable
  5. Office Supplies

C. For each item, indicate whether it is a Current Asset (CA), Non-Current Asset (NCA), Current Liability (CL), or Non-Current Liability (NCL).

  1. Inventories
  2. Prepaid Advertising
  3. Accounts Payable
  4. Bonds Payable, 3 yrs.
  5. Accrued Rent Receivable
  1. Cash in Bank
  2. Land
  3. Building
  4. Delivery Equipment
  5. Accounts Receivable

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

Assets $ 1,200,000   Revenues $ 500,000
Liabilities $              ?    Expenses   $ 300,000

The company started the year with $800,000 Capital. The owner made $100,000 cash withdrawals during the year. No additional contributions were made. 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 proper order.

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