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Question 1

What is accounting?

Answer 1

The process of recording, summarizing, and analyzing financial transactions.

Question 2

True or False: The accounting equation is Assets = Liabilities + Equity.

Answer 2

True

Question 3

Fill in the blank: The __________ is a financial statement that shows a company’s revenues and expenses over a specific period.

Answer 3

Income Statement

Question 4

What is the purpose of a balance sheet?

Answer 4

To provide a snapshot of a company’s assets, liabilities, and equity at a specific point in time.

Question 5

Multiple Choice: Which of the following is NOT a component of the accounting equation? A) Assets B) Liabilities C) Revenue D) Equity

Answer 5

C) Revenue

Question 6

What are liabilities?

Answer 6

Obligations or debts that a company owes to external parties.

Question 7

True or False: Equity represents the owner’s claim on the assets of the business.

Answer 7

True

Question 8

Fill in the blank: __________ accounting focuses on the historical financial information of a business.

Answer 8

Financial

Question 9

What is the definition of assets?

Answer 9

Resources owned by a business that have economic value.

Question 10

Multiple Choice: Which of the following is an example of a current asset? A) Land B) Cash C) Equipment D) Buildings

Answer 10

B) Cash

Question 11

What does GAAP stand for?

Answer 11

Generally Accepted Accounting Principles

Question 12

True or False: Depreciation is the process of allocating the cost of a tangible asset over its useful life.

Answer 12

True

Question 13

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

Answer 13

Net Income

Question 14

What is the purpose of an audit?

Answer 14

To evaluate the accuracy and fairness of a company’s financial statements.

Question 15

Multiple Choice: Which financial statement shows cash inflows and outflows? A) Balance Sheet B) Income Statement C) Cash Flow Statement D) Statement of Retained Earnings

Answer 15

C) Cash Flow Statement

Question 16

What is the definition of revenue?

Answer 16

The income generated from normal business operations.

Question 17

True or False: A trial balance is used to verify that total debits equal total credits.

Answer 17

True

Question 18

Fill in the blank: __________ are the costs associated with producing a product or providing a service.

Answer 18

Expenses

Question 19

What is the role of a bookkeeper?

Answer 19

To record financial transactions and maintain accurate financial records.

Question 20

Multiple Choice: An example of a fixed asset is: A) Inventory B) Accounts Receivable C) Machinery D) Cash

Answer 20

C) Machinery

Question 21

What is the impact of a transaction that increases both assets and equity?

Answer 21

It indicates that the company has earned income.

Question 22

True or False: The accounting cycle includes steps from the initial transaction to the preparation of financial statements.

Answer 22

True

Question 23

Fill in the blank: __________ accounting provides information for internal decision-making.

Answer 23

Managerial

Question 24

What is a ledger?

Answer 24

A book or digital file that contains all of a company’s financial accounts.

Question 25

Multiple Choice: Which of the following is a liability? A) Cash B) Accounts Payable C) Equipment D) Inventory

Answer 25

B) Accounts Payable

Question 26

What does the term 'double-entry accounting' mean?

Answer 26

A system where every transaction affects at least two accounts, keeping the accounting equation balanced.