Accounting Basics Quiz

What is the primary purpose of accounting?

• To calculate taxes

• To measure financial performance

• To create legal documents

• To regulate markets

Which financial statement shows a company’s financial position at a specific point in time?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Statement of Retained Earnings

Assets = Liabilities + ________?

The process of recording transactions is called:

• Auditing

• Posting

• Journalizing

• Summarizing

Which account is an asset?

• Accounts Payable

• Retained Earnings

• Cash

• Revenue

What is double-entry accounting?

• Recording in one account only

• Recording each transaction in two accounts

• Using two sets of financial statements

• Recording each transaction in different periods

Liabilities are best described as:

• Items of value owned by the business

• Revenues earned by the business

• Obligations owed to creditors

• Funds invested by owners

Which principle requires recording expenses in the same period as related revenues?

• Revenue Recognition Principle

• Cost Principle

• Matching Principle

• Consistency Principle

An increase in an expense account is recorded as:

• A debit

• A credit

• An equity increase

• A liability

What is the normal balance of a liability account?

• Debit

• Credit

• Either debit or credit

• Zero