What is the difference between cash basis and accrual basis accounting?

Accrual basis recognizes revenue when earned and expenses when incurred, Cash basis recognizes revenue when received and expenses when paid

Accrual basis recognizes revenue when paid and expenses when incurred, Cash basis recognizes revenue when earned and expenses when paid

Accrual basis recognizes revenue when earned and expenses when paid, Cash basis recognizes revenue when earned and expenses when incurred

Accrual basis recognizes revenue when paid and expenses when paid, Cash basis recognizes revenue when earned and expenses when incurred

What is a cash account?

An account that tracks a company's cash transactions

What is a credit memo?

A document that reduces the amount owed by a customer

A document that increases the amount owed by a customer

A document that reduces the amount owed to a supplier

A document that increases the amount owed to a supplier

What is a transaction?

An economic event that affects a company's financial statements

A document that summarizes a company's financial position

A document that lists a company's cash inflows and outflows

A report that shows a company's revenues and expenses

What is the difference between accounts payable and accounts receivable?

Accounts payable are amounts owed to suppliers, accounts receivable are amounts owed by customers

Accounts payable are amounts owed by customers, accounts receivable are amounts owed to suppliers

Accounts payable are amounts owed by a company, accounts receivable are amounts owed to a company

Accounts payable are amounts owed to a company, accounts receivable are amounts owed by a company

What is a bank reconciliation?

The process of matching a company's bank statement with its cash account in the general ledger

The process of reconciling a company's accounts payable with its accounts receivable

The process of reconciling a company's income statement with its balance sheet

The process of reconciling a company's accounts receivable with its cash account

What is the purpose of a petty cash fund?

To cover small, miscellaneous expenses that are not worth writing a check for

To cover large, one-time expenses that are not included in the budget

To pay for raw materials and supplies

What is a contra account?

An account with a balance opposite to its related account

An account with a balance equal to its related account

An account with a balance lower than its related account

An account with a balance higher than its related account

What is the difference between book value and market value?

Book value is the value of an asset on the balance sheet, market value is the current price at which an asset can be sold

Book value is the current price at which an asset can be sold, market value is the value of an asset on the balance sheet

Book value is the value of a liability on the balance sheet, market value is the current price at which a liability can be settled

Book value is the current price at which a liability can be settled, market value is the value of a liability on the balance sheet

What is the difference between accounts receivable and accounts payable?

Accounts receivable is money owed to a company by its customers, Accounts payable is money owed by a company to its suppliers

Accounts receivable is money owed by a company to its suppliers, Accounts payable is money owed to a company by its customers

Accounts receivable is money owed by a company to its employees, Accounts payable is money owed to a company by its employees

Accounts receivable is money owed to a company by its employees, Accounts payable is money owed by a company to its suppliers

What is a trial balance?

A list of all the accounts used by a company and their balances

What is the difference between a prepaid expense and an accrued expense?

Prepaid expenses are expenses paid in advance, Accrued expenses are expenses incurred but not yet paid

Prepaid expenses are expenses incurred but not yet paid, Accrued expenses are expenses paid in advance

Prepaid expenses are revenues received in advance, Accrued expenses are revenues earned but not yet received

Prepaid expenses are revenues earned but not yet received, Accrued expenses are revenues received in advance

What is the purpose of a general ledger?

To record all the transactions made by a company

What is the difference between a current asset and a fixed asset?

Current assets are expected to be converted to cash within one year, Fixed assets are expected to be used for more than one year

Current assets are expected to be used for more than one year, Fixed assets are expected to be converted to cash within one year

Current assets are expected to be converted to cash within one month, Fixed assets are expected to be used for more than one month

Current assets are expected to be used for more than one month, Fixed assets are expected to be converted to cash within one month

What is a credit sale?

A sale where payment is received immediately

What is the purpose of an income statement?

To show a company's revenues and expenses over a period of time

To show a company's retained earnings over a period of time

What is the difference between a cash transaction and a credit transaction?

Cash transactions are paid for immediately, Credit transactions are paid for at a later time

Cash transactions are paid for at a later time, Credit transactions are paid for immediately

Cash transactions involve a credit sale, Credit transactions involve a cash sale

Cash transactions involve a cash purchase, Credit transactions involve a credit sale

What is the difference between an asset and a liability?

Assets are things a company owns that have value, Liabilities are things a company owes to others

Assets are things a company owes to others, Liabilities are things a company owns that have value

Assets are things a company owns that generate revenue, Liabilities are things a company owes to employees

Assets are things a company owes to employees, Liabilities are things a company owns that generate revenue

What is a trial balance?

A list of all the accounts used by a company with their respective debit and credit balances

What is the difference between revenue and profit?

Revenue is the total amount of money a company earns from its business activities, Profit is the amount of money a company earns after subtracting expenses from revenue

Revenue is the amount of money a company earns after subtracting expenses from profit, Profit is the total amount of money a company earns from its business activities

Revenue is the total amount of money a company earns from its business activities, Profit is the amount of money a company earns before subtracting expenses from revenue

Revenue is the amount of money a company earns before subtracting expenses from profit, Profit is the total amount of money a company earns from its business activities

What is the purpose of a general ledger?

To record all the transactions made by a company, To summarize the transactions in the financial statements, To report the financial results of a company to its shareholders, To calculate the taxes owed by a company

What is a current asset?

An asset that is expected to be converted to cash within one year, An asset that is expected to be used in business operations for more than one year, An asset that has already been used in business operations, An asset that is not used in business operations

What is the difference between cash and accrual accounting?

Cash accounting records transactions when cash is received or paid, Accrual accounting records transactions when they are earned or incurred

Cash accounting records transactions when they are earned or incurred, Accrual accounting records transactions when cash is received or paid

Cash accounting records transactions in a cash account, Accrual accounting records transactions in a receivables or payables account, Cash accounting records transactions in a receivables or payables account, Accrual accounting records transactions in a cash account

What is the purpose of a balance sheet?

To show a company's assets, liabilities, and equity at a specific point in time, To show a company's revenues and expenses over a period of time, To show a company's cash inflows and outflows over a period of time, To show a company's retained earnings over a period of time

To show a company the general ledger running balance

What is a trial balance used for?

To show that balance pending through the chart of accounts

What is a credit memo used for?

To reduce the amount owed by a customer, To increase the amount owed by a customer, To reduce the amount owed to a supplier, To increase the amount owed to a supplier

to credit the loan, thus reducing the negative due

What is a contra account?

An account that is used to offset another account, An account that has a credit balance instead of a debit balance, An account that is used to record expenses instead of revenues, An account that is used to record revenues instead of expenses

What is the difference between a current liability and a long-term liability?

Current liabilities are debts that are due within one year, Long-term liabilities are debts that are due in more than one year

Current liabilities are debts that are due in more than one year, Long-term liabilities are debts that are due within one year

Current liabilities are debts that are due within one month, Long-term liabilities are debts that are due in more than one year

Current liabilities are debts that are due in more than one year, Long-term liabilities are debts that are due within one month

What is the purpose of the adjusted trial balance?

To ensure that the debits and credits in the general ledger are still in balance after adjusting entries are made, To ensure that the financial statements are accurate, To ensure that the income statement shows a profit, To ensure that the balance sheet shows a positive balance in equity

To ensure that the company account balances during month end

What is the difference between cash flow and net income?

Cash flow is the movement of money in and out of a business, Net income is the profit or loss of a business

Cash flow is the profit or loss of a business, Net income is the movement of money in and out of a business

Cash flow is the difference between assets and liabilities, Net income is the revenue of a business

Cash flow is the revenue of a business, Net income is the difference between assets and liabilities

What is a prepaid expense?

An expense that has been paid in advance but has not yet been incurred, An expense that has been incurred but has not yet been paid, A revenue that has been earned but has not yet been received, A revenue that has been received but has not yet been earned

An expense that the invidual paid and reimbursed later

What is a post-closing trial balance?

A trial balance that is prepared after closing entries are made to ensure that the debits and credits still balance

What is the difference between a cash basis and an accrual basis income statement?

Cash basis recognizes revenue when cash is received, Accrual basis recognizes revenue when earned

Cash basis recognizes revenue when earned, Accrual basis recognizes revenue when cash is received

Cash basis recognizes expenses when cash is paid, Accrual basis recognizes expenses when incurred

Cash basis recognizes expenses when incurred, Accrual basis recognizes expenses when cash is paid

What is the purpose of a closing entry?

To transfer the balances of temporary accounts to the retained earnings account, To adjust the balances of permanent accounts, To record transactions that occur after the end of the accounting period, To reconcile the balances of the general ledger with the balances of the subsidiary ledgers

To ensure that the general ledger has unchanged values to determine the value of an asset

What is the difference between a current liability and a long-term liability?

Current liabilities are expected to be paid within one year, Long-term liabilities are expected to be paid over more than one year

Current liabilities are expected to be paid over more than one year, Long-term liabilities are expected to be paid within one year

Current liabilities are obligations to employees, Long-term liabilities are obligations to creditors

Current liabilities are obligations to creditors, Long-term liabilities are obligations to employees

What is a prepaid expense?

An expense paid in advance that has not yet been used or consumed, An expense that has been incurred but not yet paid, An expense that has been used or consumed, A revenue that has not yet been earned

An expense that the company paid and reimbursed later

What is the difference between a cash account and a bank account?

A cash account tracks all the cash transactions made by a company, A bank account is a type of cash account held at a bank

A cash account is a type of bank account held at a bank, A bank account tracks all the cash transactions made by a company

A cash account is a type of account payable, A bank account is a type of account receivable

A cash account is a type of account receivable, A bank account is a type of account payable

What is a post-closing trial balance?

A list of all the accounts used by a company with their respective debit and credit balances after the closing entries have been made

What is a contra account?

An account that is used to offset the balance of another account, An account that is used to record expenses, An account that is used to record revenues, An account that is used to record assets

What is the purpose of a statement of cash flows?

To show a company's cash inflows and outflows over a period of time, To show a company's assets, liabilities, and equity at a specific point in time, To show a company's revenues and expenses over a period of time, To show a company's retained earnings over a period of time

To show a company ledger in a point in time

Bookkeeping & Quickbooks Exam

Authored by Learning Maha Koala

Business

12th Grade

Used 2+ times

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100 questions

Show all answers

MULTIPLE SELECT QUESTION

5 mins • 1 pt

What is the accounting equation?

Assets = Liabilities + Equity

Assets = Liabilities - Equity

Assets + Liabilities = Equity

Assets - Liabilities = Equity

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

What is a journal entry?

A record of a transaction in the accounting system

A record of a payment made to a customer

A record of a purchase made from a supplier

A record of an asset that has been sold

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

What is a ledger?

A book containing all the accounts used by a company

False

True

MULTIPLE SELECT QUESTION

5 mins • 1 pt

What is the difference between a debit and a credit?

Debits increase assets and expenses, Credits increase liabilities and revenues

Debits increase liabilities and expenses, Credits increase assets and revenues

Debits increase assets and revenues, Credits increase liabilities and expenses

Debits increase liabilities and revenues, Credits increase assets and expenses

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

What is the purpose of a trial balance?

To ensure that debits equal credits in the general ledger

To ensure that assets equal liabilities plus equity in the balance sheet

To ensure that revenues equal expenses in the income statement

To ensure that cash inflows equal cash outflows in the statement of cash flows

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

What is a chart of accounts?

A list of all the accounts used by a company

A list of all the transactions made by a company

A list of all the customers and suppliers of a company

A list of all the employees of a company

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

What is a balance sheet?

A financial statement that shows a company's assets, liabilities, and equity at a specific point in time

A financial statement that shows a company's revenues and expenses over a period of time

A financial statement that shows a company's cash inflows and outflows over a period of time

A financial statement that shows a company's retained earnings over a period of time

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