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Financial Accounting Quiz

Total questions: 50

Worksheet time: 25mins

Name
Class
Date
1.

The basic purpose of financial accounting is to:

a)

Determine employee performance

b)

Provide financial information to users

c)

Prepare government budgets

d)

Manage human resources

2.

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

a)

Scientist

b)

Manufacturer

c)

Stakeholder

d)

Driver

3.

Which of the following is a liability?

a)

Capital

b)

Machinery

c)

Loan from bank

d)

Cash

4.

Which of the following is not an asset?

a)

Land

b)

Cash

c)

Creditors

d)

Stock

5.

The accounting equation is:

a)

Assets + Capital = Liabilities

b)

Assets = Liabilities + Capital

c)

Liabilities = Assets + Capital

d)

Capital = Assets – Liabilities

6.

The double-entry system of accounting means:

a)

Only two people work on accounts

b)

Every transaction affects two accounts

c)

One entry is made twice

d)

Two books are used for accounting

7.

Credit entry in an account usually means:

a)

Increase in assets

b)

Decrease in liabilities

c)

Increase in capital or liabilities

d)

Decrease in capital

8.

A debit balance in the cash book indicates:

a)

Cash in hand

b)

Bank overdraft

c)

Loan taken

d)

Credit sales

9.

Purchase of furniture on credit will affect:

a)

Cash and Capital

b)

Furniture and Creditors

c)

Debtors and Sales

d)

None of the above

10.

Which of these is a current asset?

a)

Land

b)

Inventory

c)

Furniture

d)

Capital

11.

The main book of original entry is the:

a)

Balance sheet

b)

Journal

c)

Ledger

d)

Trial balance

12.

Posting is the process of:

a)

Recording in the journal

b)

Preparing the balance sheet

c)

Transferring from journal to ledger

d)

Balancing the accounts

13.

A ledger is used to:

a)

Record classified transactions

b)

Record cash payments only

c)

Post trial balances

d)

Analyze financial statements

14.

Which document is used to prove ownership in a business?

a)

Invoice

b)

Capital account

c)

Receipt

d)

Journal

15.

An entry made on both sides of an account is known as:

a)

Single entry

b)

Double entry

c)

Balanced entry

d)

Journal entry

16.

The trial balance is prepared to:

a)

Show profits

b)

Record transactions

c)

Check the arithmetical accuracy of accounts

d)

Calculate tax

17.

Wages paid is classified as:

a)

Asset

b)

Expense

c)

Income

d)

Liability

18.

Which of the following is not a source document?

a)

Invoice

b)

Receipt

c)

Ledger

d)

Credit note

19.

Sales return is also known as:

a)

Purchase return

b)

Return inwards

c)

Return outwards

d)

Sales discount

20.

The balance sheet shows:

a)

Profit or loss

b)

Only expenses

c)

Financial position of a business

d)

Income earned

21.

Goods bought for resale are called:

a)

Equipment

b)

Assets

c)

Purchases

d)

Supplies

22.

Capital introduced by the owner increases:

a)

Assets

b)

Owner’s equity

c)

Expenses

d)

Drawings

23.

The correct entry for payment of rent is:

a)

Debit Rent, Credit Cash

b)

Debit Rent, Credit Bank

c)

Credit Rent, Debit Sales

d)

Credit Rent, Debit Capital

24.

Drawings reduce:

a)

Assets

b)

Liabilities

c)

Capital

d)

Expenses

25.

The person who owes money to a business is called a:

a)

Creditor

b)

Debtor

c)

Lender

d)

Manager

26.

Which of the following is an intangible asset?

a)

Building

b)

Vehicle

c)

Goodwill

d)

Inventory

27.

Sales made on credit will affect:

a)

Cash and Capital

b)

Sales and Debtors

c)

Creditors and Purchases

d)

Cash and Sales

28.

The abbreviation "CR" in the ledger means:

a)

Cash Receipt

b)

Credit side

c)

Current Ratio

d)

Capital Reserve

29.

Trade discount is:

a)

Not recorded in the books

b)

Recorded in the ledger

c)

Recorded as an expense

d)

Credited to income

30.

The petty cash book is used to record:

a)

Minor cash payments

b)

Capital expenditures

c)

Salaries

d)

Loan repayments

31.

Which of these accounts normally has a credit balance?

a)

Rent

b)

Debtors

c)

Capital

d)

Drawings

32.

The balance of the purchases account is:

a)

Transferred to the trial balance

b)

Closed to the trading account

c)

Transferred to profit and loss

d)

Added to the capital

33.

Carriage inwards is added to:

a)

Sales

b)

Closing stock

c)

Purchases

d)

Expenses

34.

Creditors are shown on the:

a)

Debit side of trial balance

b)

Liabilities side of balance sheet

c)

Assets side

d)

Income statement

35.

Closing stock appears in:

a)

Journal

b)

Ledger

c)

Balance sheet and trading account

d)

Petty cash book

36.

Gross profit is calculated in the:

a)

Balance sheet

b)

Journal

c)

Ledger

d)

Trading account

37.

Net profit is transferred to:

a)

Capital account

b)

Sales account

c)

Owner’s equity

d)

Debtors account

38.

The person or business to whom money is owed is:

a)

Creditor

b)

Debtor

c)

Customer

d)

Owner

39.

Insurance paid in advance is treated as:

a)

Liability

b)

Prepaid expense

c)

Accrued income

d)

Loan

40.

The book used to record all cash and bank transactions is:

a)

Cash book

b)

Journal

c)

Ledger

d)

Trial balance

41.

Bad debts are:

a)

Good customers

b)

Interest received

c)

Irrecoverable debts

d)

Debtors account

42.

What type of account is rent?

a)

Personal

b)

Nominal

c)

Real

d)

Capital

43.

Furniture account is classified as:

a)

Nominal

b)

Personal

c)

Real

d)

Capital

44.

Which of the following is not a personal account?

a)

Debtors

b)

Sales

c)

Creditors

d)

Capital

45.

The principle of consistency means:

a)

Using same methods every year

b)

Recording all assets

c)

Balancing accounts equally

d)

Changing methods each year

46.

Depreciation is:

a)

Reduction in value of fixed assets

b)

Increase in liabilities

c)

Addition to profit

d)

A form of reserve

47.

A discount allowed is a:

a)

Gain

b)

Liability

c)

Expense

d)

Asset

48.

Return outwards reduces:

a)

Sales

b)

Expenses

c)

Purchases

d)

Capital

49.

Which of the following errors is disclosed by trial balance?

a)

Omission

b)

Commission

c)

Principle

d)

Single-sided entry

50.

Which financial statement shows the result of operations?

a)

Balance sheet

b)

Ledger

c)

Trial balance

d)

Profit and loss account

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