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