Principles of Accounts Term ReviewQuiz

What is the primary purpose of accounting?

• To hire employees

• To record and summarize financial transactions

• To create marketing strategies

• To assess competitors

What is bookkeeping primarily concerned with?

• Interpreting financial data

• Recording financial transactions

• Preparing financial reports

• Analyzing market trends

Which principle requires using the same accounting methods over time?

• Prudence

• Accrual

• Consistency

• Matching

Which of the following is an internal user of accounting information?

• Investors

• Managers

• Creditors

• Government agencies

What is the focus of the prudence principle?

• Recording anticipated gains

• Avoiding understatement of profits

• Ensuring caution in reporting income and assets

• Ignoring potential losses

Which accounting concept treats the business and its owner as separate entities?

• Matching

• Consistency

• Prudence

• Separate Entity

What is the accounting equation?

• Assets = Liabilities - Capital

• Assets = Liabilities + Capital

• Assets - Capital = Liabilities

• Assets + Capital = Liabilities

Who evaluates a company's ability to repay loans?

• Managers

• Employees

• Creditors

• Customers

What does the matching principle ensure?

• Recording transactions as they occur

• Matching expenses with revenues in the same period

• Consistency in accounting methods

• Recognizing revenue only when cash is received

Which document provides a summary of all ledger accounts?

• Journal

• Trial Balance

• Balance Sheet

• Income Statement