#1
Which of the following is an example of an asset?
Salary expense
Accounts payable
Cash
Utilities expense
#2
Which financial statement reports a company's revenues and expenses over a specific period?
Balance Sheet
Statement of Cash Flows
Income Statement
Statement of Retained Earnings
#3
Which of the following is an example of a current liability?
Accounts payable
Long-term debt
Property, plant, and equipment
Common stock
#4
Which of the following is a characteristic of a sole proprietorship?
Limited liability
Separate legal entity
Multiple owners
Single owner
#5
Which of the following is an example of a non-operating expense?
Cost of goods sold
Interest expense
Salaries expense
Rent expense
#6
Which financial statement reports a company's financial position at a specific point in time?
Income Statement
Statement of Cash Flows
Balance Sheet
Statement of Retained Earnings
#7
What is the accounting equation?
Assets = Liabilities + Owner's Equity
Revenue = Expenses
Assets = Revenue - Expenses
Liabilities = Assets + Owner's Equity
#8
What does GAAP stand for?
Generally Accepted Accounting Principles
General Accounting and Auditing Procedures
Global Accounting and Auditing Principles
Generalized Accounting Applications and Principles
#9
What is the purpose of double-entry accounting?
To simplify financial transactions
To record each transaction in two separate accounts
To minimize taxes
To increase profits
#10
What is the formula for calculating the current ratio?
Current Assets / Current Liabilities
Total Assets / Total Liabilities
Current Assets - Current Liabilities
Total Assets - Total Liabilities
#11
What is the purpose of the statement of cash flows?
To show the company's overall financial position at a specific point in time
To report the company's net income over a period of time
To provide information about how cash is generated and used during a specific period
To disclose the company's revenue and expenses
#12
What is the purpose of the adjusting entries in accounting?
To correct errors made in previous financial statements
To record transactions that occur after the end of the accounting period
To ensure that revenues and expenses are recorded in the correct period
To close temporary accounts at the end of the fiscal year
#13
Which of the following is considered a contra account?
Prepaid expenses
Accounts receivable
Accumulated depreciation
Inventory
#14
Which accounting principle states that you should record expenses and liabilities as soon as possible, but record revenues and assets only when you are sure they will occur?
Revenue Recognition Principle
Matching Principle
Conservatism Principle
Materiality Principle
#15
What is the purpose of the Sarbanes-Oxley Act (SOX)?
To regulate the accounting profession
To enhance corporate governance and financial reporting
To establish international accounting standards
To prevent tax evasion
#16
Which of the following is an example of a contra asset account?
Accumulated Depreciation
Accounts Payable
Common Stock
Retained Earnings
#17
Which accounting principle dictates that expenses should be recognized in the same period as the revenues they help to generate?
Matching Principle
Revenue Recognition Principle
Conservatism Principle
Materiality Principle