MODULE 3 - PRETEST - BASIC ACCOUNTING

Accounting is a service activity. Its function is to provide

• quantitative information

• qualitative information

• quantitative and qualitative information

• none of the choices

The basic purpose of accounting is

• to provide the information that the managers of an economic entity need to control its operations

• to provide information that the creditors of an economic entity can use in deciding whether to make loans

• to measure the periodic income of the economic entity

• to provide quantitative financial information about a business enterprise that is useful in making rational decision

The resources owned by a business are called:

• assets

• liabilities

• accounting equation

• owner’s equity

The debts of the business are called:

• assets

• liabilities

• accounting equation

• owner’s equity

The rights of the owners are called

• assets

• liabilities

• accounting equation

• owner’s equity

The components of a balance sheet equation are

• assets, income and owner’s equity

• assets, liabilities, and owner’s equity

• income, expenses and profit

• investments, withdrawals, and profit

The following can be found in an income statement except

• income

• assets

• expenses

• profit or loss

A current asset which include coins, currencies and bank deposits is called

• cash equivalent

• accounts receivable

• notes receivable

• cash

Which of the following is not subject to depreciation?

• building

• land

• equipment

• machinery

Which of the following equations is correct?

• Assets + Capital = Liabilities

• Liabilities – Capital = Assets

• Capital = Assets + Liabilities

• Capital= Assets – Liabilities