ACFE Accounting Terms Practice Test

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• Which term describes collecting and storing the minimal amount of information necessary to perform a given task?
• Why are adjusting entries necessary at period end?
• Accrued wages payable and payroll taxes payable differ in that:
• In long-term construction contracts, which method recognizes revenue progressively and which only at project completion?
• In lessee accounting under ASC 842/IFRS 16, which statement is true about capital/finance leases vs operating leases?
• Which statement best differentiates deferred tax assets (DTA) and deferred tax liabilities (DTL)?
• If a party to a contract fails to perform or signals it will not perform, without just cause, this is called?
• Provide an example distinguishing a correcting entry from an adjusting entry.
• Which item is information in a detailed expense report?
• Which term describes the cost allocation of tangible fixed assets over their useful lives?
• What term describes an expert in passing phony checks?
• Which analysis expresses the relationships among the items on the financial statements by expressing components as a percentage of a specified base value?
• What is accumulated depreciation?
• Which term describes individuals with inside knowledge about an organization that gives them the ability to exploit vulnerabilities?
• What term describes transforming readable data into an unreadable form to protect information?
• What term refers to a document listing the elements, specifications, measurements, materials, and required functions that a procuring entity needs from a contractor?
• If cost of goods sold is 400,000 and average inventory is 100,000, what is the inventory turnover?
• What is a contra-revenue account and give examples.
• Which statement about a contra-asset is true?
• Which ratio is calculated as net sales divided by average assets?
• When a group of trusted individuals test an entity's network security by attempting to breach it, this is called what?
• Which term describes the act of exploiting a false association with someone who has legitimate access to enter a restricted area?
• What agreement restricts an individual from working for competing companies within a set period after leaving the current employer?
• Which instrument is a check created by a seller that has the buyer's checking account number but no signature?
• In a bank reconciliation, what defines outstanding checks and deposits in transit?
• Which item is NOT one of the four phases of contracting?
• Which term describes withholding a portion of payments during construction?
• Which term is used to describe a loan that is likely to be uncollectible due to default?
• Which of the following is an example of an asset item?
• Under the effective interest method, how is interest expense determined?
• Which term describes a loan associated with assets that do not exist?
• Which formula correctly defines days sales outstanding (DSO)?
• In a construction loan, which party typically withholds retainage from each draw?
• Which term describes the practice of collecting and storing only the minimum information necessary to perform a task?
• When workers earn wages that will be paid in the next period but are not yet paid at year-end, which accounts are affected?
• Unearned revenue is best described as:
• A loan for a nonexistent property is called?
• What term refers to validation of a customer's identity in e-commerce?
• Which term refers to the document that lists the required elements and functions for procurement?
• What is the primary purpose of retainage in construction financing?
• Which calculation expresses a company's ability to cover short-term obligations by comparing current assets to current liabilities?
• What device monitors a company's inbound and outbound network activity and identifies suspicious patterns of activity that might indicate an attack?
• How is retainage typically calculated?
• Which procurement term refers to a noncompetitive process in which the procuring entity solicits only one prospective contractor?
• Where are cash equivalents reported on financial statements?
• Which financial statement would you consult to see a company's assets, liabilities, and equity at a given date?
• The ratio calculated by net sales on account divided by average net receivables is used to measure which of the following?
• What is a common retainage range used in many construction contracts?
• Which of the following is an example of an accrued expense?
• Which statement best differentiates revenue from gains?
• Which term best represents the owners' equity described as Common Stock plus Retained Earnings?
• An adjusting entry for a prepaid expense involves which of the following?
• Which statement best describes the purpose of a Non-Disclosure Agreement?
• Under which accounting method are revenues recognized when earned and expenses recognized when incurred?
• What is the accounting effect of improperly capitalizing an expenditure?
• In consolidation accounting, non-controlling interest represents:
• Retainage is typically withheld from payments to the contractor by which party?
• Which term describes the act of an attacker exploiting a false association with another person who has legitimate access to the area?
• Which phase is the first in the 4 Phases of Contracting?
• In the bid evaluation and award phase, which of the following is a typical procurement activity?
• What term describes an investor who buys a house and resells it at a higher price shortly thereafter?
• Which term describes an agreement between two or more people to commit an act designed to deceive?
• Under IFRS, which assets may be revalued to fair value?
• Which GAAP principle requires that expenses be recorded in the same period as the revenues they helped generate?
• Which event commonly triggers the release of retained funds to the contractor?
• Which of the following is an adjusting entry?
• Which ratio is used to assess a company's leverage by comparing total debt to total assets?
• Which of the following is an asset account example?
• Which option lists the four phases of contracting in the correct order?
• What term means real-time observation of a target's actions or communications?
• If current assets are 150,000 and current liabilities are 90,000, what is the working capital?
• The assumption that the entity will continue to operate long enough to fulfill obligations; any contrary evidence must be reported in financial statements
• Asset turnover ratio is defined as which of the following?
• What term describes software or hardware that monitors and records keystrokes on a computer?
• What is the expense representing wear and tear on a piece of company property, recorded on the income statement as an operating expense?
• Describe straight-line depreciation and its effect on financial statements.
• Which term is used for the expense representing the decline in value of intangible assets, recognized on the income statement?
• When is impairment of a long-lived asset recorded?
• Which ratio measures the relationship between total debt and the owners' equity?
• Which term best describes the medical providers category that includes medical practitioners, medical suppliers, and medical institutions?
• Obligations of an entity or outsiders' claims against the entity's assets are called what?
• What does GAAP stand for in accounting?
• Which type of insurance indemnifies against legal liabilities to others for injuries to persons, property, or other interests because of specified risks of conduct?
• Which of the following is included in the numerator of the Quick Ratio?
• An oral or written agreement between two or more parties is called what?
• Define materiality and its impact on accounting estimates.
• Which statement reflects the essence of the double-entry system?
• Which financial statement shows a snapshot of a company's financial position at a specific point in time?
• The metric that measures how efficiently assets are used
• Explain the conservatism principle in accounting.
• Which term describes the entity that authorizes an agent to act on its behalf?
• What is a fundamental distinction between cash equivalents and cash?
• What is the deliberate scrambling of a message so that it is unreadable without a key?
• In the indirect method, how is net income converted to net cash provided by operating activities?
• Which technology blocks unauthorized or unverified access to network assets?
• The phase of the contracting process focused on evaluating bids, discussing and negotiating, allowing revisions, and selecting the winning bid is known as the what?
• Which procurement method is described as 'Competitive Bidding/Sealed Bids'?
• What is the purpose of a trial balance in the accounting cycle?
• State the normal balance side for each account type: asset, liability, equity, revenue, and expense.
• Which transaction is classified as investing activities in the statement of cash flows?
• Net realizable value of accounts receivable is defined as what?
• The term used to describe the practice of keeping confidential information confidential learned during employment?
• Total Liabilities divided by Total Equity is used to calculate which ratio?
• During which phase are bids evaluated, negotiations held, revisions invited, and a winning bid selected?
• What describes the purpose of the allowance for doubtful accounts?
• Which formula represents the Quick Ratio?
• Which statement about non-controlling interest (NCI) is accurate in consolidated statements?
• DME is the abbreviation for which term?
• What is the normal balance of revenue accounts?
• Under GAAP, inventory is valued using which method?
• Which term describes a program or measure intended to safeguard proprietary information by preventing unauthorized access?
• What term describes a noncompetitive procurement process in which the procuring entity solicits only 1 prospective contractor?
• Which of the following are elements of a legal contract between two entities?
• Differentiate depreciation and amortization.
• Which statement best describes treasury stock and its accounting treatment?
• Intangible assets such as licenses and patents are typically listed under which asset category?
• Which statement accurately describes common stock, additional paid-in capital (APIC), and retained earnings?
• Which description best defines the lien period?
• Which phase follows Solicitation in the 4 Phases of Contracting?
• The release of retainage is usually accompanied by which document?
• Which phase is the final phase of contracting?
• Goodwill impairment testing under the recoverable amount approach involves comparing carrying amount to:
• What term describes billing for a higher level of medical service than the actual service rendered?
• Which of the following is NOT a GAAP revenue recognition criterion?
• Petty cash is best described as:
• Compare FIFO, LIFO, and weighted-average inventory methods on their impact on COGS and ending inventory during rising prices.
• Adjusting entries at period end affect which accounts?
• The historical cost principle states that assets and liabilities are recorded at:
• Which statement correctly distinguishes current assets from noncurrent assets?
• What is the term for the portion of contract payments withheld from each draw until construction is complete and the lien period has expired?
• Calculate the Quick Ratio given Cash = 20, Marketable Securities = 15, Receivables = 40, Current Liabilities = 50. Which of the following is correct?
• What type of insurance indemnifies against economic loss caused by dishonest acts of its employees?
• Which financial statement details the change in owner's equity over a period?
• Which statement correctly distinguishes accrued expenses from accounts payable?
• Which set lists the three categories of organizational insiders?
• Which of the following is a revenue recognition criterion under GAAP?
• Which statement best defines accrual accounting as opposed to cash basis accounting?
• What procurement method involves sealed bids and awarding the contract to the bidder with the best price and terms?
• What are the main components of the income statement?
• State the matching principle and provide a basic example.
• If a company declares and pays a cash dividend, what is the effect on the accounting equation?
• What is the term for the accounting process of allocating the cost of an intangible asset over its useful life?
• Which term describes the process whereby two or more make business transactions via computer and a network?
• A written agreement in which the parties agree to keep all trade secrets and proprietary information learned during employment confidential is called?
• Which example is considered an operating activity for the cash flow statement?
• Which account type is increased by credits and decreased by debits?
• Which term describes the identification, accumulation, measurement, and communication of economic data about an enterprise for decision makers and other interested parties?
• If a company’s DSO decreases over time, this most likely indicates:
• In revenue recognition, which factor most directly indicates that control has transferred to the customer?
• What is the combined investment of a company's owners, including common stock and retained earnings?
• When a company buys back its own shares and holds them as treasury stock, how is the number of outstanding shares affected?
• Reusable medical equipment such as crutches and wheelchairs is officially known as?
• Which GAAP revenue recognition criterion requires persuasive evidence that an arrangement exists?
• What is the purpose of a chart of accounts?
• Which measure assesses the company's ability to meet sudden cash requirements?
• Which ratio directly measures the proportion of financing that comes from creditors compared to owners?
• In a double-entry accounting system, which statement is true?
• What is the standard abbreviation for durable medical equipment?
• In the indirect method, how is depreciation expense treated?
• In bank reconciliations, which of the following best describes a deposit in transit?
• What term is used for documents that verify incurred construction expenses and request reimbursement or payment?
• Which item is a current liability?
• Which program is the primary government health insurance program for individuals below the poverty line?
• Additional paid-in capital (APIC) represents:
• Which item affects net income in the period?
• The amount of accounts receivable that the company expects to never collect is recorded as what?
• Which of the following is NOT a typical asset account?
• The term used for the amount of accounts receivable expected to be uncollectible is recorded as which of the following?
• What term describes a program designed to detect and prevent unauthorized access to sensitive information?
• Which term describes making a record of system-related events or logs for analysis?
• Release of retainage generally occurs after what conditions are met?
• Define working capital and its significance.
• In contracting, the period after award when parties fulfill obligations is called which phase?
• An agreement between two or more people to commit an act designed to deceive or gain an unfair advantage is called what?
• Explain a bank reconciliation and its significance.
• Which cybersecurity control is used to monitor for suspicious network activity?
• Internal controls are designed to prevent fraud, ensure accuracy, and safeguard assets. Which statement about internal controls is typical?
• Which of the following is NOT a typical purpose of retainage?
• Under what condition might retainage be reduced or released early?
• Which ratio measures a company's ability to meet present obligations from its liquid assets?
• Which is the correct sequence of the five steps in GAAP revenue recognition and their general purpose?
• Which term refers to the presentation of financial data and related notes prepared in conformity with GAAP?
• Which term describes individuals with access to or inside knowledge about an organization that gives them the ability to exploit the organization's vulnerabilities?
• Which of the following is NOT typically found on a balance sheet?
• Which term is used for the security testing approach that simulates an attack by attempting to breach a network?
• Distinguish between deferrals and accruals with examples.
• When is a departure from GAAP considered acceptable?
• What is the term for the written agreement between the procuring party and the contractor to modify a signed contract?
• A deferred tax asset arises from deductible amounts; a deferred tax liability arises when taxable income exceeds accounting income. Which statement correctly describes them?
• What term refers to a person who, under the law, owes a duty of loyalty to a principal or investor?
• Which term describes the submission of medical codes that define diagnoses and procedures?
• Goodwill impairment testing involves comparing:
• Under GAAP, which inventory valuation uses the lower of cost or market value?
• Which statement best describes the effect of unearned revenue on financial statements?
• Which term refers to an entity that authorizes an agent to act on its behalf?
• Which of the following correctly distinguishes accrued revenue from unbilled revenue?
• How is COGS calculated and what factors influence it?
• Which statement about inventory turnover ratio is true?
• Which item is the expense representing wear and tear on fixed assets?
• What term describes a loan that is in default or near default that the creditor believes will not be collected in full?
• What term describes an area acoustically and radio-frequency shielded so conversations within the room cannot be monitored?
• If Beginning Inventory is 100, Purchases are 200, Ending Inventory is 150, what is COGS?
• Which term represents the combined investment of owners, described as Common Stock plus Retained Earnings?
• Retainage primarily serves to protect which party in a construction project?
• Under GAAP vs IFRS, which statement about cost principle and revaluation is true?