Understanding Basic Accounting Concepts

What is the main purpose of accounting?

• To make money

• To keep track of financial information

• To decorate books

• To play games

Which of the following is a basic accounting principle?

• The Principle of Colour

• The Principle of Matching

• The Principle of Jumping

• The Principle of Eating

What is a financial statement?

• A list of your favourite toys

• A report that shows financial information

• A map of your school

• A picture of your pet

Which of these is an example of an asset?

• A loan you owe

• A car you own

• A promise you made

• A story you wrote

What is a liability?

• Something you own

• Something you owe

• Something you eat

• Something you draw

What does equity represent in accounting?

• The amount of money you owe

• The value of your ownership in something

• The number of toys you have

• The number of friends you have

Which of the following is an example of income?

• Buying a toy

• Receiving pocket money

• Eating lunch

• Playing in the park

What is an expense?

• Money you receive

• Money you spend

• Money you find

• Money you hide

Which financial statement shows a company's assets and liabilities?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Shopping List

What is the main purpose of tracking income and expenses?

• To see how much you can eat

• To understand how much money you make and spend

• To count your toys

• To measure your height