Fundamental Accounting Quiz

What is the fundamental accounting equation?

• Assets = Liabilities + Equity

• Assets = Expenses + Revenue

• Liabilities = Equity - Assets

• Revenue = Expenses + Equity

Which financial statement reports a company's revenues and expenses over a specific period?

• Balance sheet

• Income statement

• Cash flow statement

• Statement of retained earnings

What does the term "accounts payable" refer to in accounting?

• Money owed by the company to its creditors

• Money owed by customers to the company

• Money invested by shareholders into the company

• Money borrowed from a bank by the company

Which of the following is a current asset?

• Buildings

• Land

• Accounts receivable

• Equipment

What is depreciation?

• A decrease in the value of a company's assets over time

• An increase in the value of a company's assets over time

Which financial statement provides a snapshot of a company's financial position at a specific point in time?

• Income statement

• Balance sheet

• Cash flow statement

• Statement of retained earnings

What is the purpose of the statement of cash flows?

• To report a company's financial performance over a period

• To provide details on how a company's cash position changed over time

• To calculate a company's profitability

• To track changes in a company's equity

Which of the following represents owner's equity?

• Accounts payable

• Retained earnings

• Accounts receivable

• Accrued expenses

Which accounting principle requires that expenses be recorded in the same period as the revenue they help to generate?

• Matching principle

• Revenue recognition principle

• Conservatism principle

• Materiality principle

What does ROI stand for in finance accounting?

• Return on Investment

• Return on Inventory

• Revenue on Investment

• Revenue on Inventory