#1
What is the accounting equation?
Assets = Liabilities - Equity
Assets = Liabilities + Equity
Assets - Liabilities = Equity
Equity = Assets + Liabilities
#2
Which financial statement represents the financial position of a company at a specific point in time?
Income Statement
Statement of Cash Flows
Balance Sheet
Retained Earnings Statement
#3
Which financial statement provides a summary of a company's cash inflows and outflows during a specific period?
Income Statement
Balance Sheet
Statement of Cash Flows
Retained Earnings Statement
#4
Which financial statement reports the changes in equity during a specific period?
Income Statement
Statement of Cash Flows
Balance Sheet
Statement of Retained Earnings
#5
In financial accounting, what is the purpose of the trial balance?
To prepare financial statements
To detect errors in accounting entries
To summarize revenues and expenses
To reconcile bank statements
#6
What does GAAP stand for in accounting?
Generally Accepted Accounting Principles
Generally Acknowledged Accounting Procedures
General Accounting and Auditing Procedures
General Accounting and Auditing Principles
#7
What is the purpose of the income statement?
To show the financial position of a company
To report the changes in equity over a period
To present the cash flows of a company
To report the profitability of a company over a period
#8
What is the formula for calculating Return on Assets (ROA)?
Net Income / Average Total Assets
Net Income / Beginning Total Assets
Net Income / Ending Total Assets
Net Income / Total Liabilities
#9
What is the purpose of the cash flow statement's operating activities section?
To report the issuance of common stock
To report the cash transactions related to the primary business operations
To report changes in long-term liabilities
To report changes in retained earnings
#10
Which accounting method records revenues and expenses when they are actually received or paid, not when they are incurred or accrued?
Cash Basis Accounting
Accrual Basis Accounting
Double-Entry Accounting
Expense Recognition Accounting
#11
Which accounting principle requires recording expenses in the period in which they are incurred, regardless of when the payment is made?
Matching Principle
Revenue Recognition Principle
Conservatism Principle
Accrual Principle
#12
What is the purpose of the statement of retained earnings?
To show the company's profitability over a period
To explain changes in the equity section of the balance sheet
To provide details about the company's cash flows
To report the company's investment activities
#13
What is the purpose of the statement of comprehensive income?
To report the company's comprehensive financial position
To provide a detailed breakdown of expenses
To present a comprehensive summary of revenues and expenses
To explain changes in equity due to non-owner transactions
#14
What is the accounting equation after a $5,000 payment is made on account, assuming no other transactions?
Assets = Liabilities + Equity - $5,000
Assets = Liabilities - Equity - $5,000
Assets = Liabilities - Equity + $5,000
Assets = Liabilities + Equity + $5,000
#15
What is the purpose of the statement of changes in equity?
To explain changes in the equity section of the balance sheet
To report the company's investment activities
To show the company's profitability over a period
To provide a detailed breakdown of expenses