Accounting Foundations Quiz 1

What is the main purpose of accounting?

• Managing human resources

• Selling goods and services

• Recording and processing financial transactions

• Developing marketing strategies

Which of the following is an example of a financial transaction?

• Hiring a new employee

• Purchasing office supplies

• Attending a business conference

• Sending a marketing email

What account type does 'Electricity' belong to?

• Liability

• Asset

• Expense

• Revenue

Which account type represents the amount the owner invests in the business?

• Owner’s Equity

• Asset

• Expense

• Revenue

What is the relationship between the total assets, liabilities, and owner’s equity of a business at a certain date?

• Assets = Liabilities - Owner’s Equity

• Owner’s Equity = Assets + Liabilities

• Liabilities = Assets + Owner’s Equity

• Assets = Owner’s Equity + Liabilities

Which account type is always a debit in nature?

• Revenue

• Expenses

• Liabilities

• Owner’s Equity

What does 'Drawings' represent in accounting?

• When the owner withdraws money from the business for personal use

• Items that the business owns to sell

• A cost paid when borrowing money from the bank

• An income received from the bank for saving money

What does 'Accounts Receivable' represent in accounting?

• Cost paid to rent a building

• Money owed to the business for goods or services that the business sold on credit

• Income received for renting out a building

• Money owed by the business for goods or services that the business bought on credit

What does 'Bank Overdraft' represent in accounting?

• Money in the business’s bank account

• When the business has taken more money out of their bank account than was in there. They owe the bank this money

• Items the business owns for their office

• Cars or vans owned by the business

What does 'Loan from Bank' represent in accounting?

• Money owed by the business for goods or services that the business bought on credit

• When the business has borrowed money from the bank

• Income earned from the sale of goods

• An income received from the bank for saving money