Basic Accounting

The amount spent in order to produce and sell the goods and services which generates income is termed as

• Revenue

• Loss

• Expenses

• Liabilities

Which of the following is the main aim of accounting?

• To maintain ledger accounts for every asset and liability.

• To provide financial information to users of such information.

• To produce a trial balance

• To record every financial transaction individually

What is the primary purpose of a balance sheet in accounting?

• To show the company's revenue and expenses

• To display the company's financial position at a specific point in time

• To list all the company's transactions

• To calculate the company's net income

Which of the following is considered a current asset?

• Land

• Building

• Inventory

• Machinery

In accounting, what does the term 'liquidity' refer to?

• The ability to pay off long-term debts

• The ability to convert assets into cash quickly

• The profitability of a company

• The total value of a company's assets

What is the accounting equation?

• Assets = Liabilities + Equity

• Assets = Revenue - Expenses

• Assets = Liabilities - Equity

• Assets = Income + Expenses

Which financial statement provides information about a company's cash inflows and outflows?

• Balance Sheet

• Income Statement

• Cash Flow Statement

• Statement of Retained Earnings

What is depreciation in accounting?

• An increase in the value of an asset over time

• A decrease in the value of an asset over time

• The allocation of an asset's cost over its useful life

• The sale of an asset

Which of the following is a liability?

• Accounts Receivable

• Inventory

• Accounts Payable

• Cash

What is the purpose of an income statement?

• To show the company's financial position

• To report the company's revenues and expenses over a period of time

• To list all the company's assets and liabilities

• To calculate the company's cash flow