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 of the following best describes the going concern assumption?
Answer: A business is expected to continue operating indefinitely
The going concern assumption holds that a business will remain operational long enough to fulfill its obligations and complete its plans.
An adjusting entry to record accrued salaries expense at year-end would:
Answer: Debit Salaries Expense; credit Salaries Payable
Accrued salaries are recorded by debiting Salaries Expense (increasing expenses) and crediting Salaries Payable (creating a liability).
Which financial ratio measures how many times a company collects its average accounts receivable balance during a period?
Answer: Accounts receivable turnover
Accounts receivable turnover = Net Credit Sales / Average Accounts Receivable and gauges collection efficiency.
The concept of materiality in accounting means that:
Answer: Insignificant items may be handled in the most practical manner
Materiality allows minor items to be accounted for expediently when their omission or misstatement would not influence financial statement users.
Under FIFO inventory costing during a period of rising prices, compared to LIFO, a company will report:
Answer: Higher net income and higher inventory value
With rising prices, FIFO assigns older (cheaper) costs to COGS, leaving newer (higher-priced) goods in ending inventory, resulting in higher income and inventory value.
Which of the following would be recorded as a capital expenditure rather than a revenue expenditure?
Answer: Installing a new engine that extends the truck's useful life by 5 years
Capital expenditures extend an asset's useful life or increase its capacity and are capitalized; routine maintenance is expensed immediately.
On the indirect method cash flow statement, a decrease in accounts payable is shown as a:
Answer: Subtraction from net income
A decrease in accounts payable means the company paid suppliers more cash than the period's purchases expense, so cash used exceeds expense—subtract the decrease.