Business and Personal Finance © 2007

Chapter 20: Financial Accounting

Practice Tests

1
The activities, or steps, that help a business keep its accounting records in an orderly manner are called the _______.
A)accounting period
B)accounting cycle
C)accounting equation
D)posting
2
The most common accounting period usually covers one _______.
A)week
B)month
C)quarter
D)year
3
The total amount of money owed to a business by customers is called _______.
A)accounts payable
B)accounts receivable
C)T accounts
D)trial balance
4
The amount of money owed, or payable, to the creditors of a business is called _______.
A)accounts receivable
B)accounts payable
C)credit
D)trial balance
5
The system accountants use to record business transactions is called _______.
A)posting
B)trial balance
C)double-entry accounting
D)the accounting equation
6
_______ is the final step in the accounting cycle.
A)preparing a trial balance
B)collecting source documents
C)analyzing each transaction
D)posting to the general ledger
7
A(n) _______ is a report that summarizes changes that result from business transactions during an accounting period.
A)income statement
B)balance sheet
C)financial statement
D)statement of cash flows
8
A(n) _______ is a report of the net income or net loss for an accounting period.
A)income statement
B)financial statement
C)balance sheet
D)statement of cash flows
9
On a balance sheet, the balance in Accounts Payable _______ when money is paid to creditors.
A)increases
B)decreases
C)decreases by the amount paid plus 5 percent
D)stays the same
10
Owner's equity is an owner's _______.
A)liabilities
B)home
C)net income
D)claim to the assets of a business
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