CS CS Financial & Accounting Basics 2

Question 1

What is a purchase order (PO)?

Accepted Answer

A document authorizing a vendor to supply goods at an agreed price

Answer

A purchase order is a formal document issued by a buyer to a seller authorizing a specific purchase.

Question 2

Which term describes the process of recording financial transactions in the order they occur?

Accepted Answer

Journalizing

Answer

Journalizing is the first step in the accounting cycle — entering transactions chronologically into a journal.

Question 3

A budget variance occurs when:

Accepted Answer

Actual spending differs from the budgeted amount

Answer

A budget variance is the difference, positive or negative, between the budgeted amount and the actual amount spent.

Question 4

What is the purpose of an expense report?

Accepted Answer

To document employee business-related expenditures for reimbursement

Answer

An expense report allows employees to submit documentation of business expenses so they can be reimbursed by the company.

Question 5

Which accounting principle states that revenue should be recorded when earned, not when cash is received?

Accepted Answer

Accrual accounting

Answer

Accrual accounting recognizes revenue when it is earned and expenses when they are incurred, regardless of cash flow timing.

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