Can You Get a High Score on This Accounting Quiz?

Owner's equity is sometimes referred to as the book value of a company. This is the case in a sole proprietorship. If the company is a corporation, it would be referred to as Stockholders' Equity.

That initial investment by the owner of a company is called the capital. This can be done in the form of machines, goods or cash.

When transactions are recorded, it is called double-entry bookkeeping. That is because each transaction involves at least two different accounts.

When a bill is paid, you are taking money out of the company. When removing money from an account, it is called a credit.

The general ledger in accounting has two sides to it. The right side is for credits and the left side is for debits.

Assets are things you own. They are a positive thing on the company, which would explain whey they are debits on a balance sheet.

Any revenue minus expenses is equal to the net income for the company. If revenue is greater than expenses, then the company has a profit. If the revenue is less than the expenses, then the company has a net loss.

The common set of U.S. accounting principles is referred to as the generally accepted accounting principles, or GAAP. To remain a publicly traded company, they must report their financial statements to GAAP.

The balance sheet is used to show the assets, liabilities and equity all in a report format. It's a way of showing outsiders what the company owes and owns at a given time.

Most businesses have a standard accounting period of one year. This can consist of a calendar year, which begins on Jan. 1, or a fiscal year, which begins any time of the year, like July 1 through June 30.

Liabilities are money you owe to other companies or people. All of these accounts are what we owe except for accounts receivable, which would include accounts owed to us.

Accounts receivables are money owed to a company, not by the company. This is money owed to the company by its debtors.

An income statement shows the revenues, expenses and profits/losses generated by a company during a specific period. It's often considered the most important of the financial statements, as it shows how well the company is doing.

The equity in a company is the assets minus liabilities. To figure this one out, you would take the increase in assets minus the increase in liabilities, so $20,000 minus $11,000, so the overall answer would be an increase in equity of $9,000.

The T-Account is a way of formatting accounting transactions. This format shows debits on the left and credits on the right.

On a balance sheet, assets, liabilities and equity are listed. This includes cash, accounts payables and receivables, but not sales.

An audit is done for an organization by an independent agency. Not only does this ensure that the books are being taken care of properly, but it adds credibility to the financial statements.

Assets are an economic resource that can be owned and is expected to provide future economic benefits. For this one, cash, trademarks and an office building are all assets. Income tax payables are things we owe, so a liability.

The accrual method of accounting measures when revenues and expenses are incurred and not when cash is exchanged. So, that would mean expenses are reported when they happen and not when the money goes out for them.

A transaction is an instance of buying or selling something; a business deal. Since this is two parties for your business, it would be called a business transaction.

When you owe money to someone, you are in debt to them. Since you are the person owning that debt, you would be considered the debtor.

An outstanding check is a check that you have written, but has not been cashed yet by the recipient. Since that money will eventually come out of your bank balance, it should be deducted from the bank balance now.

If you aren't working for the company, then you don't know how well or badly the company is doing. Financial accounting is a way to share that information with the public using spreadsheets and statements.

A statement of cash fows is also known as the cash flow statement. This statement shows the changes in the balance sheet accounts and income and what activities caused those changes.

This is referred to as the operating cash flow of the business. In other words, this is the amount of cash generated (or lost) by the regular operating activities of a business, so the loss on the sale of the equipment would fit into this category.

Any account that is owed money on is a payable, which liabilities are. Any account owed money to us is considered a receivable.

For working capital, it fits into that category if it is a current asset or current liability. Accounts receivable would be considered a current liability.

The major services for public accountants is income tax and management advisory activities, as well as auditing. Financial accounting is part of a public accountant's job, but it's considered more of a concept and not a "service."

This is one of the underlying guidelines in accounting. This means that assets should be recorded at the cost when you got the asset. It should always remain this price, even as time goes by.

The equity of a company is equal to assets minus liabilities. Since liabilities are not known, you would subtract out the equity from the assets to determine the liabilities, which would be $138,000.

The proceeds from selling equipment would be a positive impact on cash. The dividends would have a negative impact, as you are paying out that cash.

The chart of accounts shows every account listed in the general ledger of a company. This chart breaks the accounts down into subcategories.

The FASB is the private sector oversight group for accounting standards. The General Accounting Office and IRS are both government agencies, but not in charge of external reporting standards. The FBI has little to do with accounting rule development.

A liability is a legal obligation owed to a third party. Most liabilities include the word payable, like the interest, payroll taxes and sales taxes payable. That means patents are an asset.

In a general ledger, there are two sides to post on. The left side is for debits and the right side is for credits.