Assessment Test: Fundamentals of Accounting, Business and Management 1

What statement provides an overview of a business's financial position at a given point in time?

• Balance Sheet

• Statement of Financial Position

• Both

• Neither

• I don't know.

Answer explanation

The terms Balance Sheet and Statement of Financial Position mean the same thing and are interchangeable.

The following are major account types found in a Balance Sheet except:

• Liability

• Owner's Equity

• Cash

• Assets

• I don't know.

Answer explanation

Cash is an asset account and is listed under Assets in a balance sheet.

What statement shows a business's revenues, expenses and profitability over a period of time?

• Statement of Cash Flow

• Income Statement

• Statement of Assets, Liabilities and Owner's Equity

• Statement of Changes in Financial Position

Answer explanation

This can also be called a Profit-and-Loss (P&L) statement or an Earnings statement.

The following are accounts found in an Income Statement except:

• Accumulated Depreciation

• Bad debts expense

• Revenue

• Interest income

• I don't know.

Answer explanation

Accumulated Depreciation is a contra asset account that appears in the balance sheet together with the Property, Plant and Equipment account.

Which of the following is NOT a major financial statement:

• Statement of Assets and Liabilities

• Income Statement

• Balance Sheet

• Statement of Owner's Equity

• I don't know.

What is the Fundamental Accounting Equation?

• Liabilities = Owner's Equity - Assets

• Owner's Equity = Assets + Liabilities

• Assets = Liabilities + Owner's Equity

• Assets + Owner's Equity = Liabilities

• I don't know.

What is the concept of double-entry accounting?

• For every debit, there is an equal and corresponding credit.

• A debit to an account must match a credit to the same account.

• For a unique transaction, the debit amount cannot be equal to the credit amount.

• A debit does not need a corresponding credit.

• I don't know.

Which of the following normally has a debit balance?

• Accounts Payable

• Inventory

• Income

• Owner's Equity

• I don't know.

Which of the following normally has a credit balance?

• Accounts Receivable

• Depreciation Expense

• Interest income

• Cash

• I don't know.

A debit to Salary expense account will:

• Decrease the total amount of expenses

• Increase the total amount of expenses

• I don't know.

Answer explanation

Because Salary expense normally has a debit balance, a debit to Salary expense will increase the amount of the account.