Start-Up Capital and Financial Statements Quiz

What does the matching principle ensure?

• Revenue is recognized when cash is received

• Assets are valued at current market prices

• Expenses are recorded only when paid

• Expenses are recorded in the same period as related revenues

What is angel funding?

• Crowdfunding from the public

• Funding from government grants

• Capital provided by wealthy individuals for equity

• Loans from banks with interest

What is a key characteristic of debt financing?

• It is only available to large corporations

• It is non-repayable

• It requires giving up ownership

• It must be repaid over time with interest

What does the dual aspect principle in accounting state?

• Only cash transactions are recorded

• Every transaction has a debit and a credit

• Assets must always equal liabilities

• Expenses can be recorded at any time

What is the purpose of financial accounting?

• To prepare tax returns

• To forecast future sales

• To manage internal costs

• To provide financial information for decision-making

What does the going concern principle assume?

• A business will always be profitable

• A business will only operate in the short term

• A business will continue operating indefinitely

• A business will cease operations soon

What are grants?

• Crowdfunding contributions

• Investments in exchange for equity

• Non-repayable funds for specific projects

• Repayable loans from banks

What does historical cost refer to?

• Depreciated value of an asset

• Original cost of an asset when acquired

• Current market value of an asset

• Future value of an asset

What is the main focus of management accounting?

• Tax compliance

• Preparing financial statements for investors

• Internal analysis for decision-making

• External reporting to stakeholders

What does the realization principle dictate?

• Liabilities should be recorded at historical cost

• Assets must be valued at market price

• Expenses should be recorded when paid

• Revenue should be recognized when earned