Deck 4: Basic Accounting Concepts

Question 1

In double entry bookkeeping, a trial balance is prepared. The expected result is ____.

A) a cash account balance of zero
B) that cash and expense accounts have equal balances
C) that credit accounts and debit accounts have equal totals
D) that the assets and liabilities have equal totals

Answer 1

that credit accounts and debit accounts have equal totals

Question 2

A computerized accounting system can ____.

A) provide trial balances at any time
B) provide trial balances only at the end of each accounting period
C) perform audits for incorporated businesses
D) perform most of the functions of an accountant

Answer 2

provide trial balances at any time

Question 3

When a $10,000 loan is paid off, the balance in the Bank Loan liability account will be ____.

A) $10,000
B) $0
C) the total interest paid on the loan
D) $10,000 plus the interest paid

Answer 3

$0

Question 4

Helen's Home Collection business borrows $25,000. This amount should appear as a debit to the ____ account.

A) Cash
B) Vehicles
C) Accounts Payable
D) Loan Liability

Question 5

A physician provides the same service to two patients with a charge of $80. One patient pays cash. The other patient has insurance coverage. Which is correct for a double entry system?

A) Two debit postings of $80 in the Cash account
B) Two credit postings of $80 in the Medical Services account
C) Two debit postings of $80 in the Medical Services account
D) One credit posting of $80 in the Cash account

Question 6

Manual accounting systems use records referred to as ____________________.

Question 7

Helen's Home Collection business makes a payment on the loan. The payment of $1000 consists of $900 principal and $100 interest. The Cash account will be ____.

A) reduced by $900
B) reduced by $1000
C) increased by $900
D) increased by $100

Question 8

Helen's Home Collection business receives a box of supplies that cost $168. The box came with a packing slip that correctly listed the contents. The packing slip was inadvertently discarded before the bookkeeper entered the transaction. Which of the following is true?

A) Accounts Payable will be missing a $168 debit.
B) Accounts Payable will be missing a $168 credit.
C) The Cash account will be missing a $168 credit.
D) Medical Supplies Expense will be missing a $168 credit.

Question 9

A computerized double entry accounting system will never allow the posting of a transaction in which the credits and debits do not _____________________.

Question 10

Helen's Home Collection business sends phlebotomists to patients' homes to collect blood samples. The business bought a car two years ago for $20,000. The car is an asset worth ____.

A) $20,000
B) $10,000
C) $20,000 minus two years depreciation
D) its Kelly Blue Book value

Question 11

The widely used double entry accounting system was invented over 500 years ago.

Question 12

Dr. Ray performs a limited examination of a patient with XYZ healthcare insurance. Dr. Ray knows that XYZ will pay $65 for that service. Why does the accounting entry in the Medical Services account list the standard fee of $90?

A) To show a $25 loss for tax purposes
B) The accounting program will not allow different fees
C) To enable calculations of discounted fees
D) To enable Dr. Ray to bill the patient for the unpaid amount of $25

Question 13

In double entry accounting, interest paid on a loan is posted as a(n) ____________________.

Question 14

Joe Teen has a simple business: he does odd jobs for his neighbors for $10 an hour. Joe hopes to become an accountant and would like to use a double-entry bookkeeping system for his business. What is the smallest number of accounts he needs to create?

A) one
B) two
C) four
D) eight

Question 15

A bookkeeper mistakenly posted a transaction to the Cash account and the Medical Services account. It was supposed to be posted to the Cash account and the Product Sales account. This error will be detected with a trial balance.

Question 16

One task of a full-time accountant at a publicly held corporation is to prepare an annual audit of the corporation's financial records.

Question 17

Bookkeeping transactions are completely automated in modern Practice Management Systems.

Question 18

The amount of money owed to a medical practice for a service provided today is entered as a credit in the ____________________ account.

Question 19

Items such as prescription pads and printed patient questionnaires are capital assets.

Question 20

The ultimate role of an accountant is to convert financial data into economic ____________________.

Question 21

Describe some of the challenges faced by a healthcare practice that installs a new computerized accounting system.

Question 22

Explain the roles of bookkeepers and accountants in a business.

Question 23

Describe the main features of a complete Practice Management System for a healthcare provider.

Question 24

What is a chart of accounts?

Question 25

Define operating expenses and give examples of such expenses for a physician's office.