#1
Which of the following is an example of a financial asset?
Stock
ExplanationA tradable instrument representing ownership in a company.
#2
What does ROI stand for in finance?
Return on Investment
ExplanationA measure of the profitability of an investment.
#3
What is the primary purpose of a general ledger?
To record daily transactions
ExplanationMaintains a record of all financial transactions.
#4
Which financial statement reports a company's revenues and expenses over a specific period of time?
Income statement
ExplanationDetails profit or loss over a designated timeframe.
#5
What is the purpose of a trial balance in accounting?
To verify the accuracy of ledger account balances
ExplanationChecks equality of debits and credits.
#6
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance sheet
ExplanationSummarizes assets, liabilities, and equity at a given moment.
#7
What is the formula to calculate working capital?
Current assets - Current liabilities
ExplanationIndicates short-term liquidity and operational efficiency.
#8
What is depreciation in accounting?
A decrease in the value of an asset over time
ExplanationAllocates the cost of an asset over its useful life.
#9
Which of the following is considered a long-term liability?
Bonds payable
ExplanationDebts due beyond one year.
#10
What does the term 'liquidity' refer to in finance?
The ability to convert assets into cash quickly without significant loss of value
ExplanationA measure of an asset's ease of conversion to cash.
#11
Which accounting method records revenues and expenses as they are earned or incurred, regardless of when cash is received or paid?
Accrual basis accounting
ExplanationRecognizes transactions when they occur, not when cash is exchanged.
#12
In financial accounting, what does the term 'EBITDA' stand for?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationMeasures operating performance excluding certain expenses.
#13
What is the purpose of the statement of cash flows?
To show a company's cash inflows and outflows from operating, investing, and financing activities
ExplanationHighlights sources and uses of cash.
#14
What is the purpose of the general journal in accounting?
To record transactions in a chronological order
ExplanationLogs transactions in the order they occur.
#15
Which of the following is a financing activity in the statement of cash flows?
Issuing bonds payable
ExplanationInvolves obtaining funds for the business.