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Accounting
Contributed by: Baker
  • 1. Accounting is the systematic process of recording, analyzing, and reporting financial transactions for an individual or organization. It involves preparing financial statements, budgeting, auditing, and providing insight on financial performance. By maintaining accurate records of income, expenses, assets, and liabilities, accounting helps in tracking financial health, making informed decisions, and ensuring compliance with regulations. Ultimately, accounting plays a vital role in helping individuals and businesses manage their finances effectively and achieve their financial goals.

    What is the accounting equation?
A) Assets = Liabilities + Equity
B) Cash Flow from Operating Activities = Net Income
C) Revenues - Expenses = Net Income
D) Total Revenue - Total Expenses = Profit
  • 2. Which financial statement shows the revenues and expenses of a company over a period of time?
A) Balance sheet
B) Statement of cash flows
C) Statement of retained earnings
D) Income statement
  • 3. Which of the following is classified as a current liability?
A) Accounts payable
B) Property, plant, and equipment
C) Common stock
D) Long-term debt
  • 4. What does the acronym FIFO stand for in accounting?
A) First In, Last Out
B) Funds In, Funds Out
C) First In, First Out
D) Final In, Final Out
  • 5. Which financial statement reports the changes in retained earnings for a specific period?
A) Statement of cash flows
B) Income statement
C) Balance sheet
D) Statement of retained earnings
  • 6. What is the accounting term for the process of allocating the cost of an intangible asset over its useful life?
A) Depletion
B) Amortization
C) Capitalization
D) Depreciation
  • 7. Which accounting principle requires that expenses are reported in the same period as the revenues they helped to earn?
A) Materiality principle
B) Matching principle
C) Consistency principle
D) Prudence principle
  • 8. What does EBITDA stand for in accounting?
A) Earnings Before Income, Taxes, Dividends, and Amortization
B) Earnings Before Income, Taxes, Depreciation, and Amortization
C) Earnings Before Interest, Taxes, Dividends, and Amortization
D) Earnings Before Interest, Taxes, Depreciation, and Amortization
  • 9. Which of the following statements is true about a balance sheet?
A) It shows the revenues and expenses over a period of time
B) It summarizes the net income of a company
C) It demonstrates the cash flows of a company
D) It shows the financial position of a company at a specific point in time
  • 10. What is the formula for calculating working capital?
A) Total Assets - Total Liabilities
B) Current Assets - Current Liabilities
C) Total Revenue - Total Expenses
D) Total Equity + Net Income
  • 11. Which financial statement shows the cash inflows and outflows of a company during a period?
A) Statement of retained earnings
B) Statement of cash flows
C) Income statement
D) Balance sheet
  • 12. How are assets generally listed on a balance sheet?
A) In order of liquidity
B) In order of profitability
C) In order of size
D) In order of age
  • 13. Which financial ratio measures a company's ability to pay off its short-term liabilities with its current assets?
A) Return on equity
B) Current ratio
C) Profit margin
D) Debt to equity ratio
  • 14. What is the formula for calculating earnings per share (EPS)?
A) Net Income / Average number of outstanding shares
B) Net Income / Total equity
C) Dividends / Earnings before interest and taxes (EBIT)
D) Revenue / Total assets
  • 15. What type of account is an accounts payable?
A) Revenue
B) Asset
C) Equity
D) Liability
  • 16. What is the formula for calculating the debt-to-equity ratio?
A) Total Assets / Total Equity
B) Assets / Liabilities
C) Net Income / Total Equity
D) Total Debt / Total Equity
  • 17. What does the acronym COGS stand for in accounting?
A) Cost of Goods Sold
B) Consumption of Goods Sold
C) Cost of Gross Sales
D) Commission on Gross Sales
  • 18. What does GAAP stand for in accounting?
A) Generally Accepted Accounting Principles.
B) Global Association of Accounting Professionals.
C) Global Accounting and Auditing Principles.
D) General Accounting and Auditing Procedures.
  • 19. What type of account is 'Accounts Receivable'?
A) Equity.
B) Asset.
C) Liability.
D) Expense.
  • 20. Which financial statement reports a company's financial position at a specific point in time?
A) Retained earnings statement.
B) Balance sheet.
C) Income statement.
D) Statement of cash flows.
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