Financial Accounting Tryout 1

Which accounting principle requires transactions to be recorded when they occur, regardless of cash flow?

• Cash Basis Accounting

• Accrual Basis Accounting

• Matching Principle

• Historical Cost Principle

Which financial statement reports the financial position of a company at a specific point in time?

• Income Statement

• Statement of Retained Earnings

• Balance Sheet

• Statement of Cash Flows

Which of the following is an example of a liability?

• Accounts Receivable

• Inventory

• Notes Payable

• Retained Earnings

What is the main purpose of financial accounting?

• To provide useful information for external decision-makers

• To manage company operations

• To calculate taxes for the IRS

• To determine production costs

Which entry is recorded when a company purchases supplies on credit?

• Debit Supplies, Credit Cash

• Debit Supplies, Credit Accounts Payable

• Debit Accounts Payable, Credit Supplies

• Debit Cash, Credit Supplies

Which of the following accounts normally has a credit balance?

• Cash

• Revenue

• Supplies

• Expenses

Which account is affected when a company pays dividends?

• Retained Earnings

• Accounts Payable

• Inventory

• Revenue

Which statement reports a company's profitability over a period of time?

• Balance Sheet

• Income Statement

• Statement of Retained Earnings

• Statement of Cash Flows

Revenue is recognized when:

• Cash is received

• A service is performed or a product is delivered

• An invoice is sent

• A customer places an order

Which account is classified as an asset?

• Retained Earnings

• Accounts Payable

• Equipment

• Service Revenue