Basic Accounting Quiz

What is the primary objective of accounting?

• To record financial transactions

• To interpret financial data

• To provide financial information to users

• To prepare tax returns

Which financial statement shows the financial position of a company?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Statement of Changes in Equity

What is the accounting equation?

• Assets = Liabilities + Owner’s Equity

• Assets = Revenue - Expenses

• Assets = Liabilities - Owner’s Equity

• Assets = Liabilities × Owner’s Equity

Depreciation is classified under:

• Assets

• Liabilities

• Expenses

• Revenue

Which principle states that revenue should be recognized when earned?

• Matching Principle

• Revenue Recognition Principle

• Cost Principle

• Conservatism Principle

Which of the following is a current liability?

• Equipment

• Accounts Payable

• Goodwill

• Retained Earnings

Which account is a real account?

• Capital Account

• Rent Account

• Commission Account

• Cash Account

Double-entry accounting involves recording each transaction in:

• One account

• Two accounts

• Three accounts

• Four accounts

What does a credit entry do to an asset account?

• Increases it

• Decreases it

• No effect

• Doubles it

Prepaid expenses are classified as:

• Revenue

• Expense

• Asset

• Liability