Accounting Cycle and Recording Process Quiz

What is the accounting equation?

• Owner Equity = Assets - Liabilities

• Liabilities = Assets + Owner Equity

• Assets = Owner Equity - Liabilities

• Assets = Liabilities + Owner Equity

Which of the following is considered a current asset?

• Inventory

• Machinery

• Land

• Building

What does the term 'going concern' refer to?

• The business is in financial trouble

• The business will continue to operate indefinitely

• The business will cease operations soon

• The business is being sold

In which accounting concept are expenses allocated to revenues in the same period?

• Matching Concept

• Objectivity

• Historical Cost

• Full Disclosure

What type of asset is cash?

• Non-current Asset

• Current Asset

• Tangible Asset

• Intangible Asset

Which of the following is an example of an intangible asset?

• Building

• Goodwill

• Machinery

• Land

What is the definition of liabilities?

• The total revenue generated by the business

• The expenses incurred by the business

• The amount owed by the business to outsiders

• The owner's investment in the business

What is the formula for calculating Owner Equity?

• Liabilities - Assets

• Assets + Revenues - Expenses

• Assets - Liabilities

• Assets + Liabilities

Which of the following is a non-current liability?

• Account Payable

• Bank Overdraft

• Long Term Loan

• Short Term Loan

What does the term 'drawings' refer to?

• Business expenses

• Revenue generated from sales

• Liabilities owed to creditors

• Withdrawals made for personal use