Basic Bookkeeping Concepts Quiz

What does the Accounting Cycle refer to?

• An account that tracks how much money a company owes its creditors.

• A report that reflects assets, liabilities, and owner's equity.

• A method of recording revenue and expenses when they occur.

• A multi-step process of identifying, analyzing, and recording a company's financial transactions.

Which account tracks how much money a company owes its creditors?

• Transaction Journal

• General Ledger

• Accounts Payable

• Accounts Receivable

What is Accrual Accounting?

• Recording revenue when money is exchanged.

• An account tracking money due from customers.

• Recording revenue and expenses when they occur, not when money is exchanged.

• A method of reducing asset values at equal amounts over the useful lifetime.

What does COGS stand for?

• Cash on General Sales

• Cost of Goods Sold

• Cash on Goods Sold

• Cost on General Sales

Which method assumes the oldest items in inventory are sold first?

• Double-Entry Accounting

• Straight-Line Depreciation

• FIFO

• LIFO

What is a Balance Sheet?

• A method of recording transactions in chronological order.

• A cumulative record of employee earnings.

• A financial report showing profit or loss.

• A report that reflects assets, liabilities, and owner's equity at a specifically defined moment.

What does the Double-Entry Accounting system involve?

• Recording only the debit entries for each transaction.

• Recording transactions only when cash is exchanged.

• Tracking only the expenses of a company.

• Using equal debit and credit entries for each financial transaction to maintain balance.

What is Depreciation?

• An increase in the value of an asset over time.

• A decrease in the value of an asset over time.

• The total earnings of a company before deductions.

• The money a company owes to its creditors.

What does the Statement of Cash Flows provide?

• A record of all employee payroll details.

• A comparison of budgeted and actual income and expenses.

• Information about the movement of money in and out of the company during an accounting period.

• A detailed list of all the company's assets and liabilities.

Which accounting method records revenue and expenses when money is exchanged?

• Comparative Income Statement

• Double-Entry Accounting

• Cash-Basis Accounting

• Accrual Accounting