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WorksheetsF24TH ACCOUNTING: USING FINANCIAL INFO TO MANAGE BUSINESSES
Total questions: 71
Worksheet time: 36mins
Name
Class
Date
1.
What is the primary purpose of accounting in a business?
a)
Entertainment
b)
Tracking income, expenses, assets, and liabilities
c)
Social media management
d)
Graphic design
2.
How do managers use financial reports using accounting?
a)
To create fictional stories
b)
To track employee attendance
c)
To make informed decisions
d)
To design marketing campaigns
3.
Why should everyone understand basic accounting concepts?
a)
To become an accountant
b)
To speak the standard financial language of businesses
c)
To become a book keeper
d)
To excel in computer programming
4.
How can individuals benefit from knowing the basics of accounting and financial statements?
a)
All of these
b)
To help decide which companies they want to work for
c)
To help decide which companies they want to invest in
d)
To generate good questions to ask during their job interviews
e)
To impress people who are interviewing them for a job
5.
Which of the following is NOT one of the two main financial statements that we learned about in this unit?
a)
Balance sheet
b)
Income statement
c)
Cash flow statement
6.
Which of these is a recent trend in the accounting profession?
a)
FASB
b)
GAAP
c)
Supercomputers
d)
Cloud computing
7.
The main purpose of _____ financial reports is to provide managers and officers with information that helps them make better decisions.
a)
internal
b)
external
c)
revised
d)
superseded
8.
The main purpose of _____ financial reports is to provide lenders and investors with information that helps them make better decisions.
a)
internal
b)
external
c)
revised
d)
superseded
9.
Most ______ financial statements are audited.
a)
internal
b)
external
c)
revised
d)
superseded
10.
The primary audience for managerial accounting is _____.
a)
internal
b)
external
c)
revised
d)
superseded
11.
The primary audience for financial accounting is _____.
a)
internal
b)
external
c)
revised
d)
superseded
12.
What is the role of managerial accounting in an organization?
a)
Providing information to lenders.
b)
Providing information to investors.
c)
Providing information to management.
d)
All of these.
e)
None of these.
13.
What organization is responsible for establishing financial accounting standards in the United States?
a)
Masters in Business Administration (MBA)
b)
Generally Accepted Accounting Principles (GAAP)
c)
Financial Accounting Standards Board (FASB)
d)
Certified Public Accountants (CPA)
14.
A multinational company must ensure that its financial statements conform to:
a)
The accounting principles in the countries where it is operating
b)
The accounting principles in the country where it is headquartered
c)
Both of these
d)
Neither of these
15.
What is the primary purpose of GAAP?
a)
Maximizing the net income that is reported on income statements.
b)
Minimizing the net income that is reported on income statements.
c)
Maximizing the net worth that is reported on balance sheets.
d)
Minimizing the net worth that is reported on balance sheets.
e)
Ensuring that financial information is consistently reported.
16.
According to the accounting equation, what is the relationship between assets, liabilities, and owners’ equity?
a)
Liabilities + Net Worth = Assets
b)
Liabilities - Net Worth = Assets
c)
Liabilities X Net Worth = Assets
d)
Liabilities / Net Worth = Assets
17.
Who defined the three main accounting elements as assets, liabilities, and owners’ equity in the late 15th century?
a)
Leonardo da Vinci
b)
Luca Pacioli
c)
Michelangelo
d)
Galileo Galilei
18.
What is the purpose of double-entry bookkeeping?
a)
To double check that all entries are correct
b)
To create twice as many accounting jobs
c)
To keep the accounting equation in balance
d)
To increase net worth
e)
To increase net income
19.
Why do accountants do a trial balance?
a)
To make sure that the income tax return is correct.
b)
To give potential investors a preview of the balance sheet.
c)
To give potential lenders a preview of the balance sheet.
d)
To confirm that income and expenses are equal.
e)
To confirm the accuracy of entries in the general ledger accounts..
20.
What do accountants try to “balance” when they do a trial balance?
a)
Precision and recall.
b)
Efficiency and accuracy.
c)
Debits and credits.
d)
Income and expenses.
e)
Assets and liabilities.
21.
Which of these is like a “diary” that lists every transaction as it happens?
a)
General Ledger
b)
Trial Balance
c)
General Journal
d)
Balance Sheet
e)
Income Statement
22.
What is the primary function of the balance sheet?
a)
Summarizing a company’s business transactions
b)
Reporting market trends
c)
Providing information on managerial decisions
d)
Summarizing a firm’s financial position at a specific point in time
23.
Which asset is typically listed first on a balance sheet?
a)
Fixed assets
b)
Intangible assets
c)
Land and Buildings
d)
Cash
24.
Which three of these are included in current assets:
a)
Cash
b)
Accounts Receivable
c)
Inventory
d)
Land
e)
Buildings
25.
Which three of these are fixed assets:
a)
Accounts Receivable
b)
Inventory
c)
Land
d)
Buildings
e)
Fixtures
26.
Which three of these are intangible assets:
a)
Buildings
b)
Fixtures
c)
Patents
d)
Copyrights
e)
Trademarks
27.
What is the purpose of depreciation in accounting for fixed assets?
a)
Increasing the value of assets over time
b)
Showing the increase in value of fixed assets
c)
Reflecting the declining value of fixed assets over time
d)
Adjusting the assets for inflation
28.
How does depreciation meet the matching principle of GAAP:
a)
It matches expenses with revenue
b)
It matches assets with liabilities
c)
It matches net worth with owners’ equity
d)
It matches debits with credits
29.
What are current liabilities in accounting?
a)
Liabilities due in the short term
b)
Liabilities due after more than a year
c)
Liabilities with no specific repayment period
d)
Long-term debts
30.
Why are assets listed in order of their liquidity on a balance sheet?
a)
To highlight the least valuable assets
b)
To emphasize intangible assets
c)
To clearly show whether the business is able to meet their upcoming debt obligations
d)
To highlight the biggest debts first
31.
Why are current liabilities listed first on a balance sheet?
a)
To highlight the least valuable assets
b)
To emphasize intangible assets
c)
To clearly show whether the business is able to meet their upcoming debt obligations
d)
To highlight the biggest debts first
32.
In what order are assets listed on the balance sheet?
a)
Alphabetically, from first to last
b)
Numerically, from the biggest dollar amount to the smallest
c)
Chronologically, from the oldest assets to the newest assets
d)
By liquidity, from the least liquid to the most liquid
e)
By liquidity, from the most liquid to the least liquid
33.
How is the declining value of fixed assets accounted for in the balance sheet?
a)
Through appreciation
b)
By increasing their original cost
c)
By allocating depreciation over the years
d)
All of these
34.
What is the role of trademarks?
a)
Increasing production efficiency
b)
Identifying liabilities
c)
Signifying long-term assets
d)
Differentiating goods and services
35.
What does the income statement summarize?
a)
Assets and liabilities
b)
Revenues and expenses
c)
Gross sales and net sales
d)
Operating and production costs
36.
For most businesses, income statements for external use cover:
a)
A month
b)
A quarter
c)
A year
d)
All of these
37.
Gross profit is a critical number for businesses because it shows the ability of the business _____.
a)
To calculate net sales
b)
To cover all the firm’s other expenses
c)
To determine operating expenses
d)
To increase returns and allowances
38.
Which of these are operating expenses on the income statement?
a)
Costs of goods sold
b)
Expenses directly related to producing or buying products
c)
Selling and general expenses
d)
Gross profit
39.
Why is net profit or net loss considered one of the most important pieces of information?
a)
It affects the price to earnings ratio
b)
It determines gross profit
c)
It influences operating expenses
d)
It reflects the business's age
40.
The income statement shows
a)
Past financial performance
b)
Current financial position
c)
Estimates of future financial performance
41.
The balance sheet shows
a)
Past financial performance
b)
Current financial position
c)
Estimates of future financial performance
42.
Which of the following is NOT a type of operating expense on the income statement?
a)
Salaries of top managers
b)
Advertising costs
c)
Cost of goods sold
d)
Insurance premiums
43.
How is gross profit calculated on the income statement?
a)
By subtracting operating expenses from net sales
b)
By deducting cost of goods sold from net sales
c)
By adding returns and allowances to gross sales
d)
By multiplying gross sales by cost of goods sold
44.
How do operating expenses differ from the cost of goods sold on the income statement?
a)
Operating expenses cover costs directly related to production
b)
Cost of goods sold includes marketing expenses
c)
Operating expenses are related to buying products
d)
Cost of goods sold represents the total expense of buying or producing goods or services
45.
Why is net profit or loss considered the "bottom line" on the income statement?
a)
It is the final figure on the statement
b)
It indicates the gross profit
c)
It influences operating expenses
d)
It calculates the price to earnings ratio
46.
What is the primary difference between desktop accounting and cloud accounting?
a)
Desktop accounting has more functionality
b)
Cloud accounting lacks historical reports
c)
Desktop accounting relies on the internet connection
d)
Cloud accounting stores data on a cloud server
47.
How does cloud accounting enhance accessibility to financial information?
a)
By requiring employees to install a desktop application
b)
By storing data on local hard drives
c)
By offering 24/7 access from anywhere with an internet connection
48.
What are the two sides to every accounting transaction?
a)
Benefit
b)
Sacrifice
c)
Duties
d)
Obligations
49.
What is another phrase for Owner's Equity?
a)
Net Worth
b)
Assets
c)
Liabilities
d)
Income
e)
Expenses
50.
Which of these financial statements are a "snapshot in time."
a)
Balance sheet
b)
Income Statement
51.
Which of these financial statements are for a period of time - like monthly, quarterly, or annually?
a)
Balance sheet
b)
Income Statement
52.
When a business spends cash on an expense, it reduces ___ and ___.
a)
Assets
b)
Liabilities
c)
Net Worth
53.
When a business spends cash to buy an asset, it reduces one ___ and increases another ___.
a)
asset
b)
liabilities
c)
net worth
54.
What happens in double entry accounting if only one entry is made?
a)
The net income goes negative.
b)
The net worth goes negative.
c)
The equation doesn't balance.
d)
The earth is knocked off its axis.
55.
The debits go on the ____ side.
a)
left
b)
right
c)
It depends.
56.
The credits go on the ____ side.
a)
left
b)
right
c)
It depends.
57.
A debit ____an account.
a)
increases
b)
decreases
c)
It depends.
58.
A credit ____an account.
a)
increases
b)
decreases
c)
It depends.
59.
When an asset account increases, you ____ the account.
a)
debit
b)
credit
c)
It depends.
60.
When an asset account decreases, you ____ the account.
a)
debit
b)
credit
c)
It depends.
61.
When a liability account increases, you ____ the account.
a)
debit
b)
credit
c)
It depends.
62.
When a liability account decreases, you ____ the account.
a)
debit
b)
credit
c)
It depends.
63.
When a business earns money, you ____ an income account - like sales.
a)
debit
b)
credit
c)
It depends.
64.
When a business spends money, you ____ an expense account - like advertising.
a)
debit
b)
credit
c)
It depends.
65.
Net profits ____ shareholder equity (or net worth).
a)
increase
b)
decrease
66.
Net loss ____ shareholder equity (or net worth).
a)
increases
b)
decreases
67.
Which financial statements is more important?
a)
Income statement
b)
Balance sheet
c)
Neither of these
68.
If your income is more than your expenses, you earn a ____.
a)
profit
b)
loss
69.
If your income is more than your expenses, you suffer a ____.
a)
profit
b)
loss
70.
You should think of the ____ as a picture
a)
balance sheet
b)
income statement
c)
Both of these.
d)
Neither of these.
71.
You should think of the ____ as a movie.
a)
balance sheet
b)
income statement
c)
Both of these.
d)
Neither of these.
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