Accounting Basics Quiz

What was one of the major consequences of the Enron scandal?

• Collapse of a major accounting firm

• Increased trust in accounting firms

• Growth of Enron's business

• Rise in employee retirement savings

Why is accounting crucial for businesses?

• It helps businesses understand their performance

• It increases the number of customers

• It reduces the need for financial reports

• It eliminates all business risks

What is a key feature of single entry bookkeeping?

• It requires recording each transaction twice

• It is used for businesses with complex financial structures

• It involves recording a single entry for each transaction

• It is suitable for businesses with many employees

In single entry bookkeeping, what is recorded as an expense?

• Loan repayments

• Purchase of new equipment

• Income from customers

• Employee salaries

What does double entry bookkeeping help prevent?

• Decrease in asset value

• Increase in business loans

• Fraud and errors in finances

• Reduction in daily transactions

In double entry bookkeeping, what are assets recorded as?

• Credits

• Equity

• Debits

• Liabilities

What is the key principle of double entry bookkeeping?

• Income is recorded as a liability

• Assets are always greater than liabilities

• Every transaction is recorded once

• Every credit must have a corresponding debit

In the example provided, what is considered an asset?

• Gas

• Accounts payable

• Loan

• Equity

What is a recommended step for learning accounting?

• Avoid talking to business owners

• Practice with real-world scenarios

• Focus only on theoretical knowledge

• Ignore different bookkeeping styles

How can accounting practices benefit personal finances?

• By reducing income

• By eliminating all debts

• By managing finances like a pro

• By increasing spending