Core Accounting Principles Flashcards
7 cards from real Robert Half Assessment Test practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Core Accounting Principles flashcards as text
Under the accrual basis of accounting, revenue is recognized when:
Answer: It is earned, regardless of when cash is received
Accrual accounting recognizes revenue when it is earned (goods delivered or services performed), not when cash changes hands.
Which financial statement shows a company's financial position at a specific point in time?
Answer: Balance sheet
The balance sheet (statement of financial position) presents assets, liabilities, and equity as of a specific date.
A company purchased equipment for $50,000 cash. How does this affect the accounting equation?
Answer: One asset increases $50,000; another asset decreases $50,000
Buying equipment for cash swaps one asset (cash) for another (equipment), keeping total assets unchanged.
The matching principle requires that:
Answer: Expenses are recorded in the same period as the revenue they helped generate
The matching principle ties expense recognition to the period in which the associated revenue is earned.
Which of the following is an example of a contra asset account?
Answer: Accumulated depreciation
Accumulated depreciation offsets the gross cost of a fixed asset and carries a credit balance, making it a contra asset.
When a company records depreciation expense, which accounts are affected?
Answer: Depreciation expense increases; accumulated depreciation increases
Depreciation debits Depreciation Expense and credits Accumulated Depreciation; the original asset cost is not directly reduced.
If beginning inventory is $10,000, purchases are $40,000, and ending inventory is $8,000, what is cost of goods sold?
Answer: $42,000
COGS = Beginning Inventory + Purchases − Ending Inventory = $10,000 + $40,000 − $8,000 = $42,000.