Accounting Quiz

Who is known as the 'Father of Accounting'?

• Isaac Newton

• Albert Einstein

• Tertia Coffee

• Luca Pacioli

What is the formal definition of Accounting?

• The art of writing

• The study of ancient civilizations

• The management of personal finances

• The process of collecting and processing financial data

What does a T-account represent in accounting?

• A type of financial statement

• A loan agreement

• A visual representation of debits and credits

• A method of budgeting

What is the accounting equation?

• Assets - Liabilities = Owner's Equity

• Assets = Owner's Equity + Liabilities

• Assets + Liabilities = Owner's Equity

• Owner's Equity = Assets + Liabilities

What are assets?

• Income generated by the business

• Items of value owned by a business

• Money owed to the business

• Expenses incurred by the business

What is the purpose of financial statements?

• To calculate taxes

• To manage inventory

• To report financial results and position

• To track employee performance

What principle states that business and owner finances must be kept separate?

• Historical cost principle

• Business entity principle

• Matching principle

• Conservatism principle

What does the matching principle require?

• Expenses must be matched with the revenues they help to generate

• All transactions must be recorded immediately

• Liabilities must be paid off within a year

• Assets must be valued at market price

What is the purpose of the conservatism principle?

• To encourage investment

• To minimize expenses

• To maximize profits

• To ensure realistic estimates and conservative reporting

Which of the following is considered a liability?

• Equipment owned

• Inventory on hand

• Cash in hand

• Loans owed to creditors