Financial Statements and Adjusting Entries Quiz
Test your knowledge on financial statements, balance sheets, adjusting entries, and more with this accounting quiz.
#1
Which financial statement reports a company's revenues and expenses over a period of time?
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings
#2
What is the primary purpose of the balance sheet?
To show the company's profitability
To report the company's cash flows
To list the company's assets, liabilities, and equity at a specific date
To report the company's revenues and expenses
#3
Which of the following is an adjusting entry?
Recording a customer payment for services rendered
Paying rent for the current month
Recording accrued salaries at the end of the accounting period
Purchasing equipment for cash
#4
Which financial statement is prepared first during the accounting cycle?
Income Statement
Balance Sheet
Statement of Cash Flows
Statement of Retained Earnings
#5
Which financial statement reports the cash inflows and outflows of a company?
Income Statement
Balance Sheet
Statement of Cash Flows
Statement of Retained Earnings
#6
What is the purpose of the statement of retained earnings?
To show the company's profitability
To report the changes in the company's equity over a period of time
To list the company's assets, liabilities, and equity at a specific date
To report the company's revenues and expenses
#7
Which of the following is true about the accrual basis of accounting?
It records revenues and expenses when cash is received or paid
It records revenues and expenses when they are earned or incurred, regardless of when cash is received or paid
It is used primarily for tax reporting purposes
It is simpler to implement than the cash basis of accounting
#8
Which of the following is an example of a contra account?
Accounts Payable
Accumulated Depreciation
Inventory
Prepaid Expenses
#9
Which of the following is an example of a prepaid expense?
Rent paid in advance
Salaries accrued but not yet paid
Interest on a loan
Utilities expense for the current month
#10
When are adjusting entries typically made?
At the beginning of the accounting period
Throughout the accounting period as needed
At the end of the accounting period
Only when errors are discovered
#11
Which financial statement is used to determine the ending balance of retained earnings?
Income Statement
Balance Sheet
Statement of Cash Flows
Statement of Retained Earnings
#12
Which financial statement is affected by closing entries?
Income Statement
Balance Sheet
Statement of Cash Flows
Statement of Retained Earnings
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