Financial Accounting Quiz

The basic purpose of financial accounting is to:

• Determine employee performance

• Provide financial information to users

• Prepare government budgets

• Manage human resources

The person who uses accounting information to make decisions is called a:

• Scientist

• Manufacturer

• Stakeholder

• Driver

Which of the following is a liability?

• Capital

• Machinery

• Loan from bank

• Cash

Which of the following is not an asset?

• Land

• Cash

• Creditors

• Stock

The accounting equation is:

• Assets + Capital = Liabilities

• Assets = Liabilities + Capital

• Liabilities = Assets + Capital

• Capital = Assets – Liabilities

The double-entry system of accounting means:

• Only two people work on accounts

• Every transaction affects two accounts

• One entry is made twice

• Two books are used for accounting

Credit entry in an account usually means:

• Increase in assets

• Decrease in liabilities

• Increase in capital or liabilities

• Decrease in capital

A debit balance in the cash book indicates:

• Cash in hand

• Bank overdraft

• Loan taken

• Credit sales

Purchase of furniture on credit will affect:

• Cash and Capital

• Furniture and Creditors

• Debtors and Sales

• None of the above

Which of these is a current asset?

• Land

• Inventory

• Furniture

• Capital