#1
Which financial account is used to record the company's revenues?
Asset Account
Liability Account
Equity Account
Revenue Account
#2
What is the primary purpose of the 'General Ledger' in accounting?
To record detailed transactions of a specific account
To summarize financial transactions for a specific period
To track the company's cash flow
To calculate depreciation expense
#3
What is the purpose of the 'Chart of Accounts'?
To list all the company's employees
To list all the company's financial transactions
To list all the company's assets
To list all the company's accounts and their codes
#4
What is the role of the 'Income Statement' in financial reporting?
To provide a snapshot of the company's financial position at a specific date
To summarize the company's revenues and expenses over a specific period
To detail the company's cash inflows and outflows
To list the company's assets, liabilities, and equity
#5
What is the purpose of the 'Debit' entry in double-entry accounting?
To increase assets and decrease liabilities
To decrease assets and increase liabilities
To record revenue transactions
To record expense transactions
#6
What does the term 'Accounts Payable' represent in financial accounting?
Money owed to the company by its debtors
Money owed by the company to its creditors
Investment made by the company
Revenue earned by the company
#7
Which financial statement reports the company's financial position at a specific point in time?
Income Statement
Statement of Cash Flows
Balance Sheet
Statement of Retained Earnings
#8
Which of the following is considered a long-term liability?
Accounts Payable
Notes Payable
Accrued Expenses
Prepaid Expenses
#9
What is the purpose of the 'Trial Balance' in accounting?
To ensure that debits equal credits after posting transactions
To calculate the net income of a company
To record adjusting journal entries
To prepare financial statements
#10
Which financial statement reports the company's profitability over a specific period?
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings
#11
What is the purpose of the 'Matching Principle' in accounting?
To match revenues with the expenses incurred to generate them
To match assets with liabilities
To match income with expenses
To match cash inflows with cash outflows
#12
In accounting, what does the term 'Amortization' refer to?
The process of allocating the cost of an intangible asset over its useful life
The immediate expensing of a capital asset
The recognition of revenue at the time of sale
The adjustment of financial statements for changes in accounting principles
#13
What is the purpose of the 'Accumulated Depreciation' account?
To record the amount of cash a company has on hand
To record the amount of depreciation expense recognized over time
To track the company's equity over a period
To record the sales revenue of a company
#14
In double-entry accounting, what must happen for each transaction?
One account must be debited, and another account must be credited
Only one account needs to be debited or credited
Both accounts must be debited
Both accounts must be credited
#15
In financial accounting, what does the term 'EBITDA' stand for?
Earnings Before Interest and Taxes
Earnings Before Interest, Taxes, Depreciation, and Amortization
Earnings Before Income and Debt Taxes
Earnings Before Income Taxes and Depreciation
#16
What is the purpose of the 'Cash Flow Statement'?
To report the company's financial position at a specific point in time
To analyze the flow of cash in and out of a business
To calculate the company's net income
To record the company's revenue and expenses
#17
Which of the following is a contra account?
Prepaid Rent
Accounts Payable
Accumulated Depreciation
Common Stock
#18
What is the purpose of the 'FIFO' method in inventory accounting?
To assume that inventory items are sold in the order they were acquired
To assume that inventory items are sold at the highest prices first
To assume that inventory items are sold at the lowest prices first
To assume that inventory items are sold at random
#19
What is the purpose of the 'Accrued Liabilities' account?
To record liabilities that have been paid in advance
To record liabilities that have been incurred but not yet paid
To calculate the company's net income
To track the company's equity over a period