bookkeeping basics coursera week 4 answers
Key Assumptions Part 1 Practice Quiz
1. This type of assumption/principle requires a business to disclose all information about the business that is important for a lender or investor to know in financial statements or in the financial statement notes.
- Economic Entity Assumption
- Reliability Assumption
- Conservatism Assumption
- Full Disclosure Principle
2. The Economic Entity Assumption states:
- Business and personal financial activities must be separate for business owners.
- Companies can only record financial transactions that can be verified.
- To be financially conservative when recording information that is unclear.
3. When the bookkeeper or accountant has a choice between two acceptable alternatives, they should choose the one that will report less profit, less asset amount, or a greater liability amount. This is based upon which assumption/principle?
- Vital Asset Assumption
- Conservatism Assumption
- Full Disclosure Assumption
4. Your client Rosie Fern wants to add the cost of the trellises she built for her herbal gardening business but can’t find a receipt or proof that she paid.
Which assumption/principle restricts you from recording this information in financial activities?
- The Reliability Assumption
- Economic Entity
- Conservatism Assumption
Key Assumptions Part 2 Practice Quiz
5. When a bookkeeper is using the US dollar as currency in accounting and is not considering changes in the value of that currency she is employing the:
- Collaboration Assumption
- Going Concern Assumption
- Monetary Unit Assumption
6. This assumption / principle is very subjective and should be used with caution outside of rounding to the nearest dollar when entering financial information.
- Monetary Unit Assumption
- Materiality Principle
- Conservatism Assumption
7. A company is considered a Going Concern when it:
- Is providing proof of expenditures for financial statements.
- Is losing money and access to credit.
- Is stable, able to operate and able to meet its financial obligations.
8. Cecilia Tubular sells 1980s themed enamel pins. She has a huge inventory she purchased in 1984 at $0.10 each. They are now worth $1 each. According to the Monetary Unit Assumption, you:
- Keep the value of the pins at $0.10 each.
- Split the difference and record the value at $0.45 each
- Update her financials to show the increased value of the pins to $1 each
9. If a business is using the Consistency Principle they will:
- Treat the business as a separate entity, so the activities of a business must be kept separate from any other financial activities of its business
- Ignore an accounting standard if the impact has such a small effect on financial statements that it would not be misleading.
- Adopt a specific accounting method and will enter all similar items in the exact same way in the future.
Periodicity Assumption Practice Quiz
10. True or False: According to the Periodicity Assumption, companies can only review their financial health at the end of their fiscal year?
- True
- False
11. A client owns a small vinyl sign printing company called Printing Pros. They completed a print job for a customer on August 10, but the customer did not pay for the service until October 15.
In which month should the revenue be recognized for this big print job?
- September
- August
- October
- End of the year
12. Printing Pros had another big job to do in April and needed to hire additional help to make their deadline. The new employee received their first paycheck at the beginning of May.
When should Printing Pros recognize the expense of paying their employee?
- April
- May
13. According to the Revenue Recognition Principle, when should a business recognize its revenue?
- When it is earned.
- When payment is received from a customer.
- Whenever the reporting period ends.
14. Which of the following best describes the Periodicity Assumption?
- Companies can assume that the business activity will operate indefinitely.
- Companies can assume a value for intangible assets.
- Companies can assume that business activity can be broken up into smaller measurements of time.
15. Which of the following statements would best describe the Matching Principle?
- Expenses should be recognized when they are paid, regardless of when revenue is generated.
- The manufacturing cost, or cost of goods sold, is recognized once the manufacturing process is complete.
- Expenses like manufacturing costs or depreciation should be recognized in the same period as the revenue it helped generate.
Accrual vs Cash-Basis Practice Quiz
16. According to the Cash-Basis accounting method, when would a business recognize its expenses?
- When the expense is incurred
- When the business actually receives the bill in the mail
- When the expense is paid out
17. True or False: An advantage of using the Accrual Method of accounting is that it provides a fuller picture of the state of the business.
- False
- True
18. It is permissible to use a combination of the Cash-Basis and Accrual methods of accounting as long as it is applied consistently and clearly and reflects the business's income and expenses.
- True
- False
Bookkeeping Basics Case Study Quiz
19. Instructions: Make sure you have completed the hands-on bookkeeping workbook portion of the course 1 project before starting this quiz. You will need your completed workbook to help you respond to many of the questions.
Lou made _______ in landscaping income in the month of July.
- $4,500
- $4,750
- $5,500
- $5,000
20. If Lou makes a $500 payment to the bank for his small business loan, what will be the new loan balance? Assume he is not being charged interest.
- $9,500
- $10,500
- $500
- $10,000
21. The total debits for the Trial Balance equal:
- $33,000
- $16,500
- $18,610
- $12,700
22. Lou’s total operating expenses for the month of July are ______.
(Format your answer as $x,xxx)
$2,110
23. Lou’s net income on his income statement is _______.
(Format your answer as $x,xxx)
$3,390
24. What was Lou's Accounts Receivable balance for the month of July?
(Format your answer as $x,xxx)
$4,500
25. Which accounting assumption allows bookkeepers to break a company’s financial life into smaller chunks of time?
- Entity Assumption
- Going Concern Assumption
- The Periodicity Assumption
- Accrual Basis Assumption
26. Caren Cosmos is the world's most popular soft rock folk singer. She sold t-shirts online last year and made $7,000. The money from these sales went directly into her personal banking account which she used for her personal needs. Which key accounting assumption did Caren ignore?
- Accrual Basis Assumption
- Going Concern Assumption
- Periodicity Assumption
- Entity Assumption
27. Which expense provided by Lou did you not include in the journal?
- On July 7, Lou rented a piece of commercial equipment from Home Depot for $1,000. He paid for it using his credit card.
- July 24, Lou hired a subcontractor to help with a job. He paid the subcontractor with check #0002 for $650.00
- On July 17, Lou purchased a new bicycle for his son for $275.
- On July 4, Lou put an ad in the Penny Saver for his business. He paid $450 with check #0001.
28. An accounting method in which revenues are reported when they are earned and expenses are reported when they are incurred is called:
- Cash-Basis Accounting
- Accrual Accounting
- Hybrid Accounting