← Accounting Basics Test
5 Written Questions
4 Multiple Choice Questions
- A current asset resulting from selling goods or services on credit (on account).
- The principle that requires a company to match expenses with related revenues in order to report a company's profitability during a specified time interval.
- This is the bottom line of the income statement. It is the mathematical result of revenues and gains minus the cost of goods sold and all expenses and losses (including income tax expense if the company is a regular corporation) provided the result is a positive amount.
- A word to describe whether a company is able to earn more revenues than expenses.
4 True/False Questions
income statement → This account is a non-operating or "other" expense for the cost of borrowed money or other credit. The amount appearing on the income statement is the cost of the money that was used during the time interval shown in the heading of the income statement, not the amount of interest paid during that period of time.
expenses → Costs that are matched with revenues on the income statement.
sales → Costs that are matched with revenues on the income statement.
revenue recognition principle → The accounting guideline requiring that revenues be shown on the income statement in the period in which they are earned, not in the period when the cash is collected.