#1
Which of the following is an example of a business transaction?
Purchasing office supplies with cash
ExplanationA cash transaction involving the acquisition of office supplies.
#2
What is the accounting equation?
Assets = Liabilities + Equity
ExplanationThe fundamental formula representing a company's financial position.
#3
Which financial statement provides information on a company's profitability?
Income statement
ExplanationDetails a company's revenues, expenses, and net income over a specific period.
#4
What is the purpose of a trial balance?
To identify errors in financial statements
ExplanationA tool for verifying the equality of debits and credits.
#5
Which of the following is an example of an intangible asset?
Patents
ExplanationNon-physical assets with long-term value, such as intellectual property.
#6
What is the purpose of depreciation in accounting?
To allocate the cost of assets over their useful lives
ExplanationSpreads the cost of long-term assets over their expected lifespan.
#7
What is the double-entry accounting system?
A system of recording each transaction twice
ExplanationEnsures that every financial transaction impacts at least two accounts.
#8
Which of the following is an example of a non-current liability?
Long-term loan
ExplanationA debt obligation not due within the next year.
#9
What is the formula to calculate return on equity (ROE)?
(Net Income / Shareholder's Equity) * 100
ExplanationA profitability ratio indicating the efficiency of equity utilization.
#10
Which accounting principle states that expenses should be recognized in the same period as the revenues to which they relate?
Matching principle
ExplanationEnsures proper matching of expenses with corresponding revenues.
#11
Which of the following is an example of a contra asset account?
Accumulated depreciation
ExplanationReduces the value of an asset, reflecting its depreciation over time.