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