Accounting

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) Cash Flow from Operating Activities = Net Income
B) Assets = Liabilities + Equity
C) Total Revenue - Total Expenses = Profit
D) Revenues - Expenses = Net Income

2. Which financial statement shows the revenues and expenses of a company over a period of time?

A) Statement of cash flows
B) Balance sheet
C) Income statement
D) Statement of retained earnings

3. Which of the following is classified as a current liability?

A) Common stock
B) Accounts payable
C) Long-term debt
D) Property, plant, and equipment

4. What does the acronym FIFO stand for in accounting?

A) Funds In, Funds Out
B) Final In, Final Out
C) First In, First Out
D) First In, Last Out

5. Which financial statement reports the changes in retained earnings for a specific period?

A) Balance sheet
B) Statement of cash flows
C) Statement of retained earnings
D) Income statement

6. What is the accounting term for the process of allocating the cost of an intangible asset over its useful life?

A) Amortization
B) Capitalization
C) Depletion
D) Depreciation

7. Which accounting principle requires that expenses are reported in the same period as the revenues they helped to earn?

A) Consistency principle
B) Materiality principle
C) Prudence principle
D) Matching principle

8. What does EBITDA stand for in accounting?

A) Earnings Before Income, Taxes, Dividends, and Amortization
B) Earnings Before Interest, Taxes, Dividends, and Amortization
C) Earnings Before Interest, Taxes, Depreciation, and Amortization
D) Earnings Before Income, Taxes, Depreciation, and Amortization

9. Which of the following statements is true about a balance sheet?

A) It demonstrates the cash flows of a company
B) It shows the revenues and expenses over a period of time
C) It shows the financial position of a company at a specific point in time
D) It summarizes the net income of a company

10. What is the formula for calculating working capital?

A) Current Assets - Current Liabilities
B) Total Assets - Total Liabilities
C) Total Equity + Net Income
D) Total Revenue - Total Expenses

11. Which financial statement shows the cash inflows and outflows of a company during a period?

A) Statement of cash flows
B) Income statement
C) Statement of retained earnings
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) Profit margin
B) Current ratio
C) Debt to equity ratio
D) Return on equity

14. What is the formula for calculating earnings per share (EPS)?

A) Revenue / Total assets
B) Net Income / Average number of outstanding shares
C) Net Income / Total equity
D) Dividends / Earnings before interest and taxes (EBIT)

15. What type of account is an accounts payable?

A) Revenue
B) Liability
C) Equity
D) Asset

16. What is the formula for calculating the debt-to-equity ratio?

A) Net Income / Total Equity
B) Total Assets / Total Equity
C) Assets / Liabilities
D) Total Debt / Total Equity

17. What does the acronym COGS stand for in accounting?

A) Commission on Gross Sales
B) Cost of Goods Sold
C) Cost of Gross Sales
D) Consumption of Goods Sold

18. What does GAAP stand for in accounting?

A) Generally Accepted Accounting Principles.
B) Global Association of Accounting Professionals.
C) General Accounting and Auditing Procedures.
D) Global Accounting and Auditing Principles.

19. What type of account is 'Accounts Receivable'?

A) Equity.
B) Expense.
C) Asset.
D) Liability.

20. Which financial statement reports a company's financial position at a specific point in time?

A) Retained earnings statement.
B) Statement of cash flows.
C) Income statement.
D) Balance sheet.

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