Business Transactions and Financial Events Quiz

Test your knowledge with questions on accounting equation, financial statements, ROE, depreciation, and more. Check your understanding now!

Practice Learn Test

Which of the following is an example of a business transaction?

Purchasing office supplies with cash

Watching a movie with friends

Taking a walk in the park

Reading a book at home

What is the accounting equation?

Assets = Liabilities - Equity

Assets = Liabilities + Equity

Assets = Liabilities / Equity

Assets = Liabilities * Equity

Which financial statement provides information on a company's profitability?

Balance sheet

Income statement

Cash flow statement

Statement of retained earnings

What is the purpose of a trial balance?

To identify errors in financial statements

To record financial transactions

To prepare income statements

To calculate taxes owed

Which of the following is an example of an intangible asset?

Land

Buildings

Patents

Inventory

What is the purpose of depreciation in accounting?

To increase the value of assets

To decrease the value of liabilities

To allocate the cost of assets over their useful lives

To record dividends paid to shareholders

What is the double-entry accounting system?

A system of recording financial transactions once

A system of recording each transaction twice

A system of recording financial transactions in multiple ledgers

A system of recording financial transactions only at year-end

Which of the following is an example of a non-current liability?

Accounts payable

Short-term loan

Long-term loan

Salaries payable

What is the formula to calculate return on equity (ROE)?

(Net Income / Total Assets) * 100

(Net Income / Shareholder's Equity) * 100

(Total Liabilities / Shareholder's Equity) * 100

(Total Liabilities / Net Income) * 100

#10

Which accounting principle states that expenses should be recognized in the same period as the revenues to which they relate?

Matching principle

Conservatism principle

Consistency principle

Materiality principle

#11

Which of the following is an example of a contra asset account?

Accounts payable

Prepaid expenses

Accumulated depreciation

Notes payable