#1
Which financial statement reflects a company's financial position at a specific point in time?
Balance Sheet
ExplanationSummarizes assets, liabilities, and equity at a particular moment.
#2
Which financial statement reports the revenues and expenses over a specific period of time?
Income Statement
ExplanationSummarizes the company's profitability over a defined period.
#3
What is the purpose of the adjusting entry for accrued revenue?
To record revenue that has been earned but not yet received
ExplanationRecognizes revenue earned but not yet received or invoiced.
#4
Which type of adjusting entry involves recognizing an expense that has been incurred but not yet paid?
Accrued Expense
ExplanationRecords expenses incurred but not yet paid to reflect the accurate financial position.
#5
What is the purpose of the adjusting entry for prepaid expenses?
To record expenses that have been incurred but not yet paid
ExplanationRecords prepaid expenses as they are incurred.
#6
What is the purpose of adjusting entries in accounting?
To update accounts for accruals and deferrals
ExplanationEnsures accurate recognition of revenues and expenses in the accounting period.
#7
Which of the following is an example of an accrued expense?
Salaries payable
ExplanationRepresents expenses incurred but not yet paid at the end of the accounting period.
#8
What is the purpose of a contra account in accounting?
To decrease the value of a related account
ExplanationOffsets the balance in another account to present a net amount.
#9
Which financial statement shows the changes in equity over a specific period?
Statement of Retained Earnings
ExplanationDetails changes in retained earnings, considering net income and dividends.
#10
Which type of account represents the accumulated profits of a corporation that are not distributed to shareholders?
Retained Earnings
ExplanationAccumulated earnings retained for business growth or financial stability.
#11
What type of account is the Accumulated Depreciation?
Expense
ExplanationAccumulates the total depreciation of an asset over its useful life.
#12
Which adjusting entry is made to record revenue that has been earned but not yet received?
Debit Accounts Receivable, Credit Revenue
ExplanationRecognizes revenue when earned, regardless of payment.
#13
What is the purpose of the closing entries in accounting?
To close temporary accounts at the end of the period
ExplanationTransfers balances of temporary accounts to permanent ones.
#14
Which of the following is an example of a prepaid expense?
Prepaid rent
ExplanationPayment for an expense before it is incurred, gradually expensed.
#15
Which financial statement reports the cash inflows and outflows during a specific period?
Cash Flow Statement
ExplanationDetails the movement of cash in and out of the business.