#1
Which of the following financial statements reports a company's financial position at a specific point in time?
Balance sheet
ExplanationReports financial position at a specific time.
#2
Which accounting principle states that assets should be recorded at their original cost?
Cost principle
ExplanationAssets recorded at original cost.
#3
What does the term 'depreciation' refer to in accounting?
Decrease in the value of an asset over time
ExplanationAsset value decrease over time.
#4
What is the purpose of the trial balance?
To ensure the equality of debits and credits
ExplanationEnsures equality of debits and credits.
#5
What is the accounting equation?
Assets = Liabilities + Equity
ExplanationFundamental accounting equation.
#6
Which of the following is an example of a current liability?
Accounts payable
ExplanationExample of current liability.
#7
Which financial statement summarizes a company's revenues and expenses over a period of time?
Income statement
ExplanationSummarizes revenues and expenses.
#8
What is the purpose of the double-entry accounting system?
To ensure accuracy in recording financial transactions
ExplanationEnsures accuracy in recording transactions.
#9
What is the formula to calculate the current ratio?
Current assets / Current liabilities
ExplanationCurrent assets divided by current liabilities.
#10
Which of the following is a contra-account to accounts receivable?
Allowance for doubtful accounts
ExplanationContra-account to accounts receivable.
#11
Which of the following is an example of an operating expense?
Cost of goods sold
ExplanationExample of operating expense.
#12
What is the purpose of the statement of cash flows?
To report the company's cash inflows and outflows during a period
ExplanationReports cash inflows and outflows.
#13
Which financial statement shows how changes in balance sheet accounts and income affect cash and cash equivalents?
Statement of cash flows
ExplanationShows cash and cash equivalents changes.