Pre-Test (Accounting for Non-Accountants)

Accounting Principle is general law or rule followed in the preparation of financial statements.

• TRUE

• FALSE

Cash basis considers the revenue as realized when the goods are produced.

• TRUE

• FALSE

The ledger is the book of original entry.

• TRUE

• FALSE

The income statement shows either net profit or net loss for a particular period.

• TRUE

• FALSE

What are the main sections on a balance sheet?

• 1. Assets, liabilities, income

• 1. Assets, liabilities, equity

• 1. Assets, liabilities, expenses

• 1. Assets, gains, revenue

Which side of the ledger account are debits recorded on?

• Left

• Right

• 1. Depends on the debit

Which side of the ledger account are credits recorded on?

• Left

• Right

• 1. Depends on the debit

Increasing an asset involves crediting the account.

• TRUE

• FALSE

Equity is the difference between:

• Assets and liabilities.

• Revenues and Expenditures.

• Common stock and preferred stock.

• Revenues and liabilities.

Purchase of machinery for cash.

• 1. Increases the total cash.

• 1. Decreases the total asset.

• 1. Remains total asset unchanged

• 1. Decreases total liability.