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
Which inventory costing method assumes the most recently purchased items are sold first?
Answer: LIFO
LIFO (Last-In, First-Out) assumes the newest inventory items are sold before older ones.
A $1,200 insurance premium was paid on October 1 for 12 months of coverage. How much is prepaid insurance on December 31?
Answer: $900
Three months have expired (Oct–Dec), leaving 9 months prepaid: $1,200 × 9/12 = $900.
Which of the following transactions increases both total assets and total liabilities?
Answer: Borrowing money from a bank
Borrowing from a bank increases cash (asset) and increases notes payable (liability) by equal amounts.
Under GAAP, intangible assets with indefinite useful lives (like goodwill) are:
Answer: Tested annually for impairment instead of amortized
ASC 350 requires goodwill and other indefinite-lived intangibles to be tested for impairment at least annually rather than amortized.
A credit entry to Accounts Receivable indicates:
Answer: A customer paid their outstanding balance
Crediting Accounts Receivable reduces the balance, reflecting that a customer has paid what they owed.
Which of the following correctly describes working capital?
Answer: Current assets minus current liabilities
Working capital = Current Assets − Current Liabilities and measures short-term liquidity.
The lower-of-cost-or-net-realizable-value rule for inventory is an application of which accounting principle?
Answer: Conservatism (prudence)
Conservatism requires that potential losses be recognized immediately while gains are only recorded when realized.