FMVA Module 1 Quiz

What is the primary accounting equation?

• Assets - Liabilities = Equity

• Assets + Equity = Liabilities

• Assets + Liabilities = Equity

• Assets = Liabilities + Equity

Which of the following accounts is considered a control account?

• Inventory

• Sales Revenue

• Cash

• Accounts Receivable

What type of accounting recognizes revenues and expenses when they are incurred, regardless of cash flow?

• Modified cash basis accounting

• Tax accounting

• Accrual accounting

• Cash basis accounting

Which of the following is NOT a component of the Income Statement?

• Operating Expenses

• Sales Revenue

• Cost of Goods Sold

• Retained Earnings

What is the purpose of an Aging Report?

• To calculate depreciation

• To manage inventory levels

• To track cash inflows

• To monitor overdue accounts

Which method of inventory costing assumes that the first items purchased are the first sold?

• Weighted Average

• Specific Identification

• FIFO

• LIFO

What is the term for the excess of the acquisition price over the fair value of net assets acquired in a business combination?

• Contingent Liability

• Deferred Tax

• Intangible Asset

• Goodwill

Which of the following is a characteristic of a finance lease?

• The lessor retains ownership risks

• Payments are treated as operating expenses

• The lessee recognizes an asset and liability

• The lease term is shorter than the asset's economic life

What is the primary purpose of the Statement of Cash Flows?

• To provide information about cash inflows and outflows

• To show profitability

• To report financial position

• To summarize equity changes

Which of the following is a temporary difference in accounting?

• Dividends received

• Interest income

• Prepaid expenses

• Depreciation expense