Accounting Basics

What is the purpose of accounting?

• To provide accurate financial information for decision-making

• To bake cookies

• To predict the weather

• To perform surgery

What is the difference between assets and liabilities?

• Assets are what a company owes, while liabilities are what a company owns.

• Assets and liabilities are the same thing.

• Assets are what a company owns, while liabilities are what a company owes.

• Assets are intangible, while liabilities are tangible.

What is a balance sheet?

• A balance sheet is a type of exercise equipment.

• A balance sheet is a type of musical instrument.

• A balance sheet is a recipe for baking cakes.

• A balance sheet is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Define revenue in accounting terms.

• Revenue is the expenses incurred in a business

• Revenue is the income generated from the sale of goods or services.

• Revenue is the total assets of a company

• Revenue is the liabilities of a company

What is the role of an accountant?

• Write poetry

• Prepare and examine financial records, ensure accuracy and compliance with laws and regulations, and provide insights for financial decisions.

• Design architectural blueprints

• Perform heart surgeries

Explain the concept of depreciation.

• Depreciation is only applicable to intangible assets.

• Depreciation is the increase in value of a tangible asset over time.

• Depreciation is the allocation of the cost of a tangible asset over its useful life.

• Depreciation is a one-time expense recorded on the income statement.

What is the accounting equation?

• Assets = Equity - Liabilities

• Assets = Liabilities + Equity

• Liabilities = Assets - Equity

• Equity = Assets - Liabilities

What are the different types of financial statements?

• Financial report

• Profit statement

• Income statement, Balance sheet, Cash flow statement, Statement of changes in equity

• Equity statement

The accounting cycle starts with the:

• preparation of ledger accounts

• preparation of trial balance

• analysis of business transaction

• preparation of adjusting entries

In accounting/bookkeeping, the term posting refers to:

• transfer of information from ledge to trial balance

• transfer of entries from journal to ledger

• preparation of financial statements from trial balance

• none of the above