AI

Question 1

What is the accounting equation?

Answer 1

Assets = Liabilities + Equity

Question 2

True or False: The primary purpose of accounting is to provide information for decision making.

Answer 2

True

Question 3

Fill in the blank: The __________ is a financial statement that shows a company’s financial position at a specific point in time.

Answer 3

Balance Sheet

Question 4

What is the purpose of a cash flow statement?

Answer 4

To provide information about the cash inflows and outflows of a business over a period.

Question 5

Which of the following is not a type of business organization? a) Sole Proprietorship b) Partnership c) Corporation d) Franchise

Answer 5

d) Franchise

Question 6

What is the definition of ‘assets’?

Answer 6

Resources owned by a business that have economic value.

Question 7

True or False: Liabilities are obligations that a company owes to outside parties.

Answer 7

True

Question 8

What are the two main types of equity?

Answer 8

Contributed capital and retained earnings.

Question 9

Fill in the blank: __________ accounting focuses on the preparation of financial statements for external users.

Answer 9

Financial

Question 10

What does GAAP stand for?

Answer 10

Generally Accepted Accounting Principles

Question 11

What is the main purpose of a trial balance?

Answer 11

To ensure that total debits equal total credits.

Question 12

Multiple choice: Which financial statement shows the revenues and expenses of a company? a) Balance Sheet b) Income Statement c) Cash Flow Statement d) Statement of Changes in Equity

Answer 12

b) Income Statement

Question 13

What is depreciation?

Answer 13

The allocation of the cost of a tangible asset over its useful life.

Question 14

True or False: An increase in liabilities will always decrease equity.

Answer 14

False

Question 15

What is the definition of ‘revenue’?

Answer 15

Income generated from normal business operations.

Question 16

Fill in the blank: In accounting, __________ refers to the process of recording financial transactions.

Answer 16

Bookkeeping

Question 17

What is the difference between current and non-current assets?

Answer 17

Current assets are expected to be converted to cash within one year, while non-current assets are held for longer than one year.

Question 18

True or False: The matching principle states that expenses should be recorded in the same period as the revenues they help to generate.

Answer 18

True

Question 19

What is a journal entry?

Answer 19

A record of a financial transaction in the accounting system.

Question 20

What is the purpose of an audit?

Answer 20

To examine financial statements for accuracy and compliance with accounting standards.

Question 21

Fill in the blank: __________ occurs when a company’s expenses exceed its revenues.

Answer 21

Net Loss

Question 22

What is the formula for calculating gross profit?

Answer 22

Gross Profit = Revenue - Cost of Goods Sold

Question 23

Multiple choice: Which of the following is a long-term liability? a) Accounts Payable b) Notes Payable c) Bonds Payable d) All of the above

Answer 23

c) Bonds Payable

Question 24

What is the purpose of the statement of changes in equity?

Answer 24

To show changes in the ownership interest of the shareholders over a period.

Question 25

True or False: Intangible assets are physical assets that can be touched.

Answer 25

False

Question 26

What does the term 'liquidity' refer to in accounting?

Answer 26

The ability of a company to meet its short-term obligations.

Question 27

Fill in the blank: __________ is the process of allocating the cost of an intangible asset over its useful life.

Answer 27

Amortization

Question 28

What is a fiscal year?

Answer 28

A one-year period that companies use for financial reporting and budgeting.

Question 29

What is the definition of 'accounts receivable'?

Answer 29

Money owed to a company by its customers for goods or services delivered.

Question 30

Multiple choice: Which accounting method recognizes revenue when earned and expenses when incurred? a) Cash basis b) Accrual basis c) Modified cash basis d) None of the above

Answer 30

b) Accrual basis

Question 31

What is the role of a controller in an organization?

Answer 31

To oversee the accounting operations and ensure compliance with financial regulations.

Question 32

True or False: A balance sheet is also known as a statement of financial position.

Answer 32

True

Question 33

What is the purpose of internal controls?

Answer 33

To safeguard assets and ensure the accuracy of financial records.

Question 34

Fill in the blank: __________ is the term used for the difference between the actual cash balance and the cash balance reported in the books.

Answer 34

Cash Variance

Question 35

What is a contingent liability?

Answer 35

A potential obligation that may occur depending on the outcome of a future event.

Question 36

Multiple choice: Which of the following is an example of a current asset? a) Land b) Equipment c) Inventory d) Patent

Answer 36

c) Inventory

Question 37

What is the definition of 'dividends'?

Answer 37

Payments made to shareholders from a company's profits.

Question 38

True or False: The revenue recognition principle dictates when revenue can be recognized.

Answer 38

True

Question 39

What is a ledger?

Answer 39

A collection of accounts that shows the changes in each account resulting from transactions.

Question 40

Fill in the blank: __________ are costs that do not change with the level of production.

Answer 40

Fixed Costs

Question 41

What is the difference between financial accounting and management accounting?

Answer 41

Financial accounting focuses on reporting to external users, while management accounting focuses on internal decision-making.

Question 42

Multiple choice: Which financial statement provides information about a company’s profitability? a) Cash Flow Statement b) Income Statement c) Balance Sheet d) Statement of Changes in Equity

Answer 42

b) Income Statement

Question 43

What is the purpose of the accounts payable?

Answer 43

To track money owed by a company to its suppliers for goods and services received.

Question 44

True or False: A company’s net income is calculated by subtracting total expenses from total revenues.

Answer 44

True

Question 45

Fill in the blank: __________ is the systematic reduction of the carrying amount of an asset over its useful life.

Answer 45

Depreciation

Question 46

What is the role of an accountant?

Answer 46

To prepare, analyze, and verify financial records and ensure compliance with regulations.

Question 47

What is the definition of 'equity'?

Answer 47

The residual interest in the assets of the entity after deducting liabilities.

Question 48

Multiple choice: Which of the following is a method of inventory valuation? a) FIFO b) LIFO c) Weighted Average d) All of the above

Answer 48

d) All of the above

Question 49

What is the purpose of a budget?

Answer 49

To plan and control financial resources.

Question 50

True or False: A current liability is an obligation that is expected to be settled within one year.

Answer 50

True

Question 51

Fill in the blank: __________ is the amount remaining after a company's total liabilities are subtracted from its total assets.

Answer 51

Owner's Equity

Question 52

What is the formula for calculating net income?

Answer 52

Net Income = Total Revenues - Total Expenses

Question 53

What is the purpose of cost accounting?

Answer 53

To analyze the costs of production and assist in budgeting and financial planning.

Question 54

Multiple choice: Which of the following is a characteristic of a sole proprietorship? a) Limited liability b) Unlimited liability c) Separate legal entity d) None of the above

Answer 54

b) Unlimited liability

Question 55

What is an expense?

Answer 55

The costs incurred in the process of earning revenue.

Question 56

True or False: All businesses must follow the same accounting standards.

Answer 56

False

Question 57

Fill in the blank: __________ is a decrease in the value of an asset over time due to wear and tear.

Answer 57

Depreciation

Question 58

What is the main difference between a profit and a loss?

Answer 58

Profit occurs when revenues exceed expenses, while a loss occurs when expenses exceed revenues.

Question 59

What is a financial ratio?

Answer 59

A mathematical comparison of two financial statement items used to assess a company's performance.

Question 60

Multiple choice: Which of the following is not a financial statement? a) Income Statement b) Balance Sheet c) Sales Report d) Cash Flow Statement

Answer 60

c) Sales Report

Question 61

What is the definition of 'retained earnings'?

Answer 61

The cumulative amount of net income that has been retained in the company rather than distributed as dividends.

Question 62

True or False: A company must disclose all relevant information in its financial statements.

Answer 62

True

Question 63

What is an income summary?

Answer 63

A temporary account used to close revenue and expense accounts at the end of a period.

Question 64

Fill in the blank: __________ is the practice of recording revenue when cash is received.

Answer 64

Cash Basis Accounting

Question 65

What are operating expenses?

Answer 65

Expenses incurred in the normal course of business operations.

Question 66

Multiple choice: Which of the following is a non-operating expense? a) Cost of Goods Sold b) Interest Expense c) Rent Expense d) Salaries Expense

Answer 66

b) Interest Expense

Question 67

What is the purpose of a statement of cash flows?

Answer 67

To provide detailed information about cash inflows and outflows from operating, investing, and financing activities.

Question 68

True or False: All transactions must be recorded in the accounting system regardless of their size.

Answer 68

True

Question 69

What is the role of the Financial Accounting Standards Board (FASB)?

Answer 69

To establish and improve financial accounting and reporting standards.

Question 70

Fill in the blank: __________ is the difference between total revenues and total expenses.

Answer 70

Net Income

Question 71

What is the definition of 'cash equivalents'?

Answer 71

Short-term investments that are easily convertible to cash with negligible risk of value change.

Question 72

Multiple choice: Which financial statement is prepared first in the accounting cycle? a) Income Statement b) Balance Sheet c) Cash Flow Statement d) Trial Balance

Answer 72

d) Trial Balance

Question 73

What is the impact of issuing stock on a company’s balance sheet?

Answer 73

It increases the equity section of the balance sheet.

Question 74

True or False: Financial statements are only useful to internal users.

Answer 74

False