1. What does the abbreviation GAAP stand for?

Your Answer: Generally Accepted Accounting Principles There are various generally accepted accounting principles that should always be followed by all businesses if they don't want the trouble of having auditors keep a close eye on their company. 87% of players have answered correctly. 2. What is the amount collected from the sale of goods and services called? Your Answer: Revenue When a company does a service or sells something revenue is recorded on an income statement and raises the overall equity of the owner. 81% of players have answered correctly. 3. What is it called when your expenses are greater than your revenues on an income statement? Your Answer: Net Loss You'd have a loss because you've lost money in that period of time and it would be a net meaning overall during the accounting period. 76% of players have answered correctly. 4. Which accounting principle states that the same amount of time must be used for each accounting period? Your Answer: Time Period Principle Accounting statements can be made on period of time such as monthly, annually, semi-annually etc. Every time a statement is made it should be made on the same duration of time each time to follow the time period principle. 37% of players have answered correctly. 5. What is the cash basis of accounting? Your Answer: Revenue and expenses are recognized as cash comes in or goes out. The cash basis of accounting is rarely used, however when it is used, it is recorded on an income statement when the owner of a company physically receives a payment for their goods or services or sends out a check for an expense they incurred. 58% of players have answered correctly. 6. This can be written either in an account form or a report form. Your Answer: Balance Sheet The account form balance sheet is divided into two columns assets and liabilities and equity. The report form balance sheet has assets, liabilities and equity all down a single column. 36% of players have answered correctly.

7. Which of the following is not considered a financial statement? Your Answer: Income Statement The correct answer was Trial Balance Financial statements are what the investors in the company can see. Balance Sheets and Income Statements show how a company is doing at a certain point in time. A trial balance is just a method of checking there are no errors in calculations. 57% of players have answered correctly. 8. When completing the financial statements, it is necessary to complete the income statement before the balance sheet. Your Answer: True The income statement must always be written before the balance sheet because the income statement generates a net income or loss which needs to be known so the owner equity on the balance sheet must be the same. 74% of players have answered correctly. 9. An income statement encompasses which of the following? Your Answer: Expenses, Revenues, Net Income or Net Loss The income statement shows expenses, and revenues for a specific period of time and the net income or loss are calculated by subtracting expenses from revenues. If the number is negative the company is experiencing a net loss, if it's positive it's a net income. 80% of players have answered correctly. 10. When an owner takes out money from the business for personal use, its impact on equity is recorded on the credit side. Your Answer: True The correct answer was f When cash is taken out, cash decreases on the credit side therefore the impact on the equity must occur on the opposite side, namely the debit side.