Accounting Chapters 1-3 Test

Why is accounting important?

• It creates money for shareholders
• It helps the CEO decide who to fire when a business is failing
• It helps businesses track income and expenditures, ensure statutory compliance, and provide investors with quantitative financial information.
• It creates equity for the business

How many owners does a sole proprietorship have?

• Only one
• Only two
• Three
• Unlimited

Which is the correct Accounting Equation?

• Assets = Liabilities + Owners Equity
• Assets = Liabilities - Owners Equity
• Liabilities = Assets + Owners Equity
• Owners Equity = Assets - Liabilities

Using the Accounting Equation, how much is the question mark? 10,000 = ? + $6,000

• $16,000
• $3,000
• $5,000
• $4,000

Using the Accounting Equation, how much is the question mark? $12,000 = $3,000 + ?

• $3,000
• $4,000
• $9,000
• $10,000

Using the Accounting Equation, how much is the question mark? ? = $6,200 + $8,800

• $14,000
• $15,000
• $16,000
• $17,000

Which is an example of an Asset

• A debt
• Owner's Equity
• A liability
• Prepaid Insurance

Which is an example of a CURRENT asset?

• Cash
• Property
• Equipment
• Accounts Payable

Which is an example of a FIXED asset?

• Cash
• Inventory
• Accounts Receivable
• Property/Land

Which is a liability?

• Accounts Receivable
• Accounts Payable
• Property
• Cash