Financial Accounting Quiz

What is the primary purpose of a ledger?

• To record the business transactions

• To provide a summary of assets and liabilities

• To store petty cash receipts

• To facilitate the preparation of balance sheets

Which of these is an example of a current asset?

• Land

• Equipment

• Inventory

• Goodwill

What is the double-entry principle?

• Recording expenses in two accounts

• Every debit entry has a corresponding credit entry

• Recording profits and losses in two entries

• Recording all liabilities as debits

Which account is debited when cash is withdrawn from the bank?

• Cash

• Bank

• Owner's equity

• Capital

Depreciation is applied to:

• Current liabilities

• Fixed assets

• Revenue accounts

• Capital accounts

The primary purpose of a trial balance is to:

• Check the arithmetical accuracy of ledger entries

• Record all business transactions

• Measure profitability

• Monitor cash flows

Which document authorizes payments for goods received?

• Receipt

• Invoice

• Cheque

• Voucher

The purchase of a fixed asset on credit would be recorded in the:

• Purchases Journal

• Sales Journal

• General Journal

• Petty Cash Book

Prepaid expenses are classified as:

• Current assets

• Current liabilities

• Fixed assets

• Long-term liabilities

Which of the following is a liability?

• Debtors

• Creditors

• Capital

• Revenue