NOCTI Accounting Foundations Practice Test

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• CFP stands for which credential?
• Under LIFO in a period of rising prices, which statement is true?
• Perpetual inventory system is defined as.
• Which financial statement reports a company's revenues and expenses for a specific period?
• Which term describes a columnar accounting form used to summarize the general ledger information needed to prepare the financial statements?
• Which metric measures the efficiency of collecting receivables?
• What is accrued expense?
• Which account is a contra-asset that reduces accounts receivable to reflect uncollectible amounts?
• Which statement best defines a physical inventory?
• If an asset has a cost of $50,000 and accumulated depreciation of $20,000, what is the net book value?
• What defines a fiscal year?
• Which process uses journal entries to prepare temporary accounts for a new fiscal period?
• Which statement is true about net income?
• Which basis of accounting recognizes revenue when earned and expenses when incurred?
• Current assets include
• Revenue is defined as.
• Copying the debits and credits from the journal to the ledger is a process known as
• The book value of an asset is the difference between its account balance and its related contra account balance.
• EFT is defined as
• Which statement best defines net worth?
• Which financial statement reports net income for a period?
• Which statement about gross margin is true?
• Which credential is for individuals seeking personal financial planning services?
• Which statement expresses the basic accounting equation?
• Which of the following would be classified as a long-term asset rather than a current asset?
• The chief accounting officer is known as which title?
• Which type of account carries its balance forward to the next accounting period?
• If the chart of accounts uses 400s for Revenue, which of the following is a Revenue account?
• Plant assets are:
• When recording a credit sale, which accounts are affected?
• Accumulated depreciation is associated with which type of asset?
• Which statement describes accrual basis accounting?
• Which describes the effect of an adjusting entry for accrued revenue?
• Which best describes how accumulated depreciation is shown on the balance sheet?
• Which description best defines a cash flow statement?
• Which entry increases accumulated depreciation?
• What is the accounts receivable turnover ratio?
• Wages that the company owes to employees but has not paid yet are referred to as
• Gain is defined as.
• What is a purchase return and allowance?
• Which items are included in common payroll deductions?
• Which statement about cost of goods sold (COGS) is true for a merchandising company?
• The Debt to Equity Ratio is calculated as
• Which inventory method involves counting items at intervals rather than updating continuously?
• How does accumulated depreciation affect the asset's net book value?
• What is a promissory note?
• What is 'gross margin'?
• What is the purpose of a Trial Balance?
• An audit trail is typically stored securely and backed up. Which statement is most accurate?
• Which accounting term describes the allocation of the cost of tangible assets over their useful lives?
• Which inventory system requires a physical count to determine quantities on hand?
• What does accumulated depreciation represent?
• Accruals refer to revenues earned or expenses incurred before cash has been exchanged. Which statement best describes this concept?
• What is the journal entry for a credit sale?
• What is a post-closing trial balance?
• A fiscal period is
• Which description best defines an adjusting entry?
• Which financial statement reports assets, liabilities, and owner's equity on a specific date?
• How do journals differ from ledgers?
• If a company has current assets of 150,000 and current liabilities of 100,000, what is its working capital?
• Merchandise inventory is classified as a current asset.
• What is accrued revenue?
• Which inventory cost flow method assigns the newest costs to cost of goods sold?
• Which concept requires revenue earned and expenses incurred to earn that revenue to be reported in the same fiscal period?
• Net income is defined as
• If the fiscal period ends, which accounts are reset to zero for the next period?
• Which term refers to a 12-month fiscal period?
• Which accounts accumulate information until it is transferred to the owner's capital account?
• Which statement best describes NSF (non-sufficient funds)?
• What is the journal entry when paying a supplier for a prior credit purchase?
• How is bad debt expense recorded in the accounting records?
• Which category includes items such as Mortgage Payable and Dividends Payable?
• Which type of account generally has a debit balance?
• Which equation best represents cost of goods sold for a merchandising company?
• Which two accounts are affected by a purchase return?
• Which of the following best describes the purpose of accrual accounting?
• Which statement about temporary accounts is true?
• When labeling accounts, the 300s are used for which type of accounts?
• Which balance sheet account decreases accounts receivable to reflect uncollectible amounts?
• How is the aging method used to estimate uncollectible accounts?
• The debt-to-equity ratio compares a company's total liabilities with its shareholder equity.
• What is the purpose of performing a bank reconciliation?
• In a proprietorship, closing entries are prepared in which order?
• Which statement best describes permanent accounts (real accounts)?
• Which executive is in charge of marketing strategy and brand?
• What is the normal balance of accumulated depreciation?
• Which inventory system updates COGS and Inventory continually?
• Petty cash replenishment is accomplished by which of the following?
• Which option represents the formula for calculating cost of goods sold as Beginning Inventory plus Purchases minus Ending Inventory?
• Which document lists the total payroll expenses and liabilities for a period, including wages payable?
• When labeling accounts, the 100s are used for which type of accounts?
• Which statement best describes competence in accounting practice?
• The debt-to-equity ratio is a measure of a company's financial leverage.
• Which area focuses on information prepared for external users such as bankers and stockholders?
• Which of the following is not a typical payroll deduction?
• Which statement best describes the difference between a service business and a merchandising business in terms of inventory and COGS?
• Which item is not a current asset?
• What is the purpose of a chart of accounts?
• How is depreciation expense recorded in relation to accumulated depreciation?
• What is the objective evidence concept in accounting?
• Can accumulated depreciation ever have a debit balance?
• Which executive is responsible for a business's finances?
• Which statement best describes a post-closing trial balance?
• LIFO is an inventory method in which
• What is net realizable value?
• What is the purpose of the posting process?
• Which statement is true about accumulated depreciation?
• Net income or net loss is reported on which financial statement?
• Which role is responsible for daily operations?
• Net loss occurs when
• What type of account is accumulated depreciation?
• What is the purpose of internal controls?
• Which document is prepared after the closing entries are posted to ensure all accounts balance for the new period?
• What describes a comparison between two components of financial information?
• Which financial statement shows assets, liabilities, and owner's equity at a specific date?
• What is Merchandise Inventory?
• When labeling accounts, the 400s are used for which type of accounts?
• The primary purpose of a trial balance is to verify that
• When labeling accounts, the 500s are used for which type of accounts?
• Which term describes an increase in owner’s equity from selling goods/services?
• Which account is typically classified as a current asset on the balance sheet?
• What does accumulated depreciation indicate about an asset?
• In the cash flow statement, under which activities would cash from customers typically be reported?
• What does GAAP stand for?
• Which statement shows revenues and expenses for a period, resulting in net income?
• A promissory note is the source document for issuing a _________.
• Merchandise inventory is classified as what on the balance sheet?
• Which statement best describes depreciation as a concept?
• In the seller's books, when a customer takes a sales discount, which journal entry is recorded?
• Reconciling a bank account involves the process of making sure you and the bank agree on how much money is in your checking account
• In automated accounting, audit trails are typically backed up on a server. Which statement is true about audit trails?
• Which statement describes the consistent reporting concept?
• Under accrual basis accounting, when is revenue recognized?
• Where is accumulated depreciation reported on financial statements?
• Which concept requires financial statements to include all relevant data needed to understand a company's financial condition and performance?
• What is the current ratio?
• Which document organizes the general ledger data before preparing financial statements?
• Which item would be considered a source document?
• Which inventory cost flow method uses the oldest costs for calculating cost of goods sold?
• Which of the following is the correct journal entry to record depreciation expense?
• The Chief Marketing Officer is responsible for what?
• If an asset costs $10,000 and accumulated depreciation is $3,000, what is its net book value?
• An audit trail is best described as
• What is the note payable interest accrual entry?
• Accrued wages represent the wages the company owes for days worked but have not been paid.
• When labeling accounts, the 200s are used for which type of accounts?
• What is the debt-to-equity ratio?
• Which area concentrates on reporting information to internal users such as company managers and officers?
• Microsoft Excel is an example of which type of software?
• If total debits do not equal total credits after posting, what is the most likely cause?
• A labor union uses financial statements to determine profitability and the organization's ability to pay salaries.
• Which of the following statements about adjusting entries for accruals is correct?
• Which best characterizes accumulated depreciation?
• What is the difference between note payable and accounts payable?
• What does ATM stand for?
• What is the purpose of a closing entry?
• What is the gross profit formula?
• What is the effect of a sales discount on the seller's books?
• What are closing entries?
• Depreciation is defined as
• What is a source document?
• Which statement best describes the balance sheet's purpose?
• What are the normal balances for assets, liabilities, and owner's equity?
• Which of the following is a valid name for a contra-revenue account?
• Which financial statement helps evaluate the company's financial standing?
• Which term describes a paper used to record a transaction before posting?
• What does double-entry accounting require?
• Depreciation affects which financial statements?
• Periodic inventory system is defined as.
• Which statement about salvage value is true?
• What is the primary purpose of GAAP?
• Loss is defined as.
• Under cash basis accounting, when is revenue recognized?
• On the balance sheet, which term represents the owner's claim to assets after liabilities are paid?
• Which inventory cost flow method uses the average cost per unit to compute cost of goods sold?
• The summary of an employee's payroll data is called the employee earning record. Which term best describes this document?
• Which accounts accumulate information from one fiscal period to the next?
• NSF is an acronym used in banking. What does it stand for?
• In a perpetual inventory system, which accounts are updated with each sale?
• What is the journal entry for a cash sale?
• Which statement about the purpose of adjusting entries is true?
• How do you compute working capital?
• What is the journal entry to record depreciation expense?
• The primary purpose of an audit trail is to trace who made changes and when.
• Accrued expenses are defined as expenses incurred in one fiscal period but not paid until a later fiscal period. Which term describes this condition?
• Which term describes the decrease in equity from activity other than selling goods/services (e.g., selling a plant asset)?
• What is the effect of a purchase discount on the buyer's books?
• Which financial statement best shows wages payable as of a date?
• Net pay is calculated as which of the following?
• What is the journal entry for a purchase on credit?
• What is the difference between temporary and permanent accounts?