Mixed Deck — All Accounting Online Program Topics Flashcards
100 cards from real Accounting Online Program practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 20 Mixed Deck — All Accounting Online Program Topics flashcards as text
The break-even point is reached when:
Answer: Total revenue equals total costs (fixed + variable)
The break-even point occurs when total revenue equals total costs, meaning the company has neither a profit nor a loss.
What does FICA stand for in US payroll tax accounting?
Answer: Federal Insurance Contributions Act
FICA stands for the Federal Insurance Contributions Act and funds Social Security and Medicare through payroll taxes split between employer and employee.
In job-order costing, which document accumulates all costs assigned to a specific job?
Answer: Job cost sheet
A job cost sheet records direct materials, direct labor, and applied overhead for each unique job, serving as the subsidiary ledger for work-in-process inventory.
Target costing begins with:
Answer: Determining the market selling price and subtracting desired profit to arrive at an allowable cost
Target costing works backward from a competitive market price: target cost = target selling price − desired profit margin, and the product must be designed to meet that cost.
Which of the following is an example of a preventive internal control?
Answer: Password requirements on accounting software
Preventive controls, like password requirements, are designed to deter or prevent errors and irregularities before they occur, unlike detective controls that identify them after the fact.
A business demanded a client pay a $200,000 deposit for work that will start the following year towards the end of the current fiscal year. The corporation listed the $200,000 as a liability on its balance sheet at the end of the current year. Which accounting rule or guideline barred the business from including the $200,000 in its current-year income statement?
Answer: Revenue Recognition
The Revenue Recognition principle dictates that revenue should only be recognized when it is earned, meaning the goods or services have been delivered or performed, regardless of when cash is received. Since the $200,000 is a deposit for work to be performed in the following year, the service has not yet been rendered in the current fiscal year. Therefore, it is recorded as a liability (unearned revenue) on the balance sheet and cannot be included in the current year's income statement until the work is completed.
The primary purpose of an external audit is to:
Answer: Express an opinion on whether financial statements are fairly presented
External auditors issue an independent opinion on whether financial statements are presented fairly in accordance with GAAP, providing assurance to investors and creditors.
The difference between budgeted and actual results is called a:
Answer: Variance
A variance is the difference between a budgeted, planned, or standard amount and the actual amount incurred or achieved.
A company has net income of $150,000 and average shareholders' equity of $750,000. What is the Return on Equity (ROE)?
Answer: 20%
ROE = Net Income / Average Shareholders' Equity = $150,000 / $750,000 = 20%.
Which accounting method is generally required for businesses with average annual gross receipts exceeding $30 million?
Answer: Accrual method
The IRS generally requires larger businesses (exceeding the gross receipts threshold) to use the accrual method, which matches income and expenses to the period they occur.
What is net income?
Answer: Total revenues minus total expenses
Net income equals total revenues minus total expenses for a given accounting period.
Which rule or concept permits a business to ignore the evolution of the dollar's purchasing power over time?
Answer: Monetary Unit
The Monetary Unit principle assumes that the monetary unit (e.g., the U.S. dollar) is stable and that its purchasing power does not change significantly over time. This allows accountants to record transactions in nominal dollar amounts without adjusting for inflation or deflation. While a simplification, it makes financial statements more practical and comparable across different periods.
Which principle states that a business should record assets at the price paid to acquire them?
Answer: Historical cost principle
The historical cost principle requires assets to be recorded at their original purchase price, providing objectivity and verifiability.
A company purchases office supplies for $500 cash. Which entry correctly records this transaction?
Answer: Debit Supplies $500, Credit Cash $500
Purchasing supplies increases the Supplies asset (debit) and decreases Cash (credit).
Which principle states that the personal transactions of an owner should be kept separate from business transactions?
Answer: Business entity principle
The business entity principle treats the business as separate from its owner(s) for accounting purposes.
The Statement of Financial Position for a nonprofit organization presents:
Answer: Total assets, liabilities, and net assets classified by donor restrictions
The Statement of Financial Position (the nonprofit balance sheet) presents total assets, total liabilities, and net assets separated into with and without donor restriction categories.
Data normalization in a relational database reduces:
Answer: Data redundancy and update anomalies
Normalization organizes database tables to eliminate redundant data and ensure data integrity, preventing update, insertion, and deletion anomalies.
Enterprise Funds are a type of which government fund category?
Answer: Proprietary fund
Enterprise Funds are proprietary funds used to account for activities financed primarily through user charges, operating similarly to private businesses.
What is a 'walkthrough' in the context of auditing internal controls?
Answer: Tracing a single transaction from initiation through recording to confirm controls operate as described
A walkthrough involves following a single transaction through every step of the accounting system to verify that described controls are actually in place and functioning.
Which qualitative characteristic makes financial information useful for comparing two different companies?
Answer: Comparability
Comparability allows users to identify similarities and differences between companies by applying consistent accounting standards.