#1
Which of the following is a liability account?
Cash
Accounts Receivable
Accounts Payable
Inventory
#2
Which account type increases with a debit entry?
Liabilities
Assets
Owner's Equity
Revenue
#3
What does the term 'contra account' refer to in accounting?
An account with a debit balance
An account with a credit balance
An account that offsets another account
An account with zero balance
#4
Which accounting principle states that expenses should be recognized in the period in which they are incurred?
Matching Principle
Revenue Recognition Principle
Consistency Principle
Materiality Principle
#5
What is the purpose of the contra asset account?
To record the purchase of assets
To offset the effects of accumulated depreciation
To track liabilities
To record sales revenue
#6
What is the accounting equation?
Assets = Liabilities + Owner's Equity
Revenue = Expenses
Debits = Credits
Net Income = Gross Profit - Operating Expenses
#7
Which financial statement reports a company's profitability over a specific period?
Balance Sheet
Income Statement
Statement of Cash Flows
Retained Earnings Statement
#8
What is the purpose of the trial balance?
To identify errors in the financial statements
To prepare financial statements
To record adjusting entries
To close the books at the end of the accounting period
#9
In a journal entry, which account is credited in a purchase transaction?
Accounts Payable
Cash
Inventory
Sales
#10
When recording a sales transaction, which account is debited?
Accounts Receivable
Sales
Cash
Inventory
#11
What is the purpose of the post-closing trial balance?
To ensure that all accounts have zero balances
To identify errors in the financial statements
To record adjusting entries
To prepare financial statements
#12
What is the purpose of the adjusting journal entry?
To record routine daily transactions
To close temporary accounts
To update account balances for accruals and deferrals
To calculate depreciation
#13
How does the double-entry accounting system work?
It records only one side of a transaction
It records both the debit and credit aspects of a transaction
It records transactions in a single journal
It is not used in modern accounting
#14
What is the primary purpose of the cash flow statement?
To show the financial position of a company at a specific date
To report the company's revenues and expenses
To provide information about cash receipts and payments
To calculate the return on investment
#15
What is the accounting cycle?
The process of closing temporary accounts
The process of recording financial transactions in chronological order
The process of preparing financial statements
The process of calculating depreciation
#16
How does the accrual basis of accounting differ from the cash basis?
Accrual basis recognizes transactions when cash is received or paid
Cash basis recognizes transactions when they are incurred
Accrual basis only records cash transactions
Cash basis is not used in modern accounting
#17
What is the purpose of the general ledger?
To record routine daily transactions
To organize and summarize all financial transactions
To prepare financial statements
To calculate depreciation