#1
Which of the following is an example of a business transaction?
A manager attending a conference
A company purchasing inventory on credit
An employee taking a lunch break
A customer browsing products online
#2
Which financial statement reports a company's revenues and expenses over a specific period?
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings
#3
What does the term 'GAAP' stand for in accounting?
Generally Accepted Accounting Principles
Generally Acknowledged Accounting Practices
Generally Agreed Accounting Protocols
General Accounting and Auditing Procedures
#4
Which financial statement shows the financial position of a company at a specific point in time?
Income Statement
Statement of Cash Flows
Balance Sheet
Statement of Retained Earnings
#5
Which of the following is a contra asset account?
Accounts Payable
Prepaid Expenses
Accumulated Depreciation
Accounts Receivable
#6
What is the purpose of the double-entry accounting system?
To record financial transactions twice
To ensure that all transactions are recorded accurately
To prevent errors in financial statements
To simplify the accounting process
#7
Which financial statement provides an overview of a company's cash inflows and outflows during a specific period?
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings
#8
What is the accounting equation?
Assets = Liabilities + Equity
Assets + Liabilities = Equity
Liabilities = Assets + Equity
Equity = Assets - Liabilities
#9
Which of the following is considered a contra account?
Depreciation Expense
Accumulated Depreciation
Sales Revenue
Accounts Payable
#10
What is the purpose of a trial balance?
To determine net income or net loss
To ensure that debits equal credits
To prepare financial statements
To record adjusting entries
#11
What is the purpose of the adjusting entries?
To close temporary accounts
To record internal transactions
To update account balances for accrual accounting
To prepare financial statements
#12
Which accounting principle states that expenses should be recorded in the same period as the revenues they help to generate?
Matching Principle
Revenue Recognition Principle
Conservatism Principle
Consistency Principle
#13
What is the purpose of the cash flow statement?
To show a company's financial position at a specific point in time
To report the company's profitability over a period
To provide information about a company's cash receipts and cash payments
To record changes in owner's equity
#14
What is the formula for calculating the return on equity (ROE)?
(Net Income / Average Total Assets) * 100
(Net Income / Total Equity) * 100
(Total Assets / Total Equity) * 100
(Total Equity / Net Income) * 100
#15
Under the cash basis of accounting, when are revenues recognized?
When cash is received
When expenses are incurred
When cash is paid
When goods are sold
#16
Which of the following is considered a long-term liability?
Accounts Payable
Short-term Loan Payable
Notes Payable due in 12 months
Bonds Payable due in 5 years
#17
What does the term 'EBITDA' stand for in financial analysis?
Earnings Before Interest, Taxes, Depreciation, and Amortization
Earnings Before Income and Taxes, Deductions, and Amortization
Earnings Before Interest, Taxes, Depreciation, and Adjustments
Earnings Before Interest, Taxes, Deductions, and Adjustments
#18
Which accounting principle states that revenue should be recognized when it is earned, regardless of when cash is received?
Revenue Recognition Principle
Matching Principle
Conservatism Principle
Materiality Principle
#19
Which of the following is not a component of the accounting cycle?
Recording transactions
Preparing financial statements
Analyzing market trends
Closing accounts