#1
Which financial statement shows the overall financial performance of a company for a specific period?
Income Statement
Balance Sheet
Cash Flow Statement
Statement of Retained Earnings
#2
Which accounting method recognizes revenue and expenses when they are actually received or paid, rather than when they are incurred?
Cash Basis Accounting
Accrual Basis Accounting
Double-Entry Accounting
Managerial Accounting
#3
What is the purpose of the International Financial Reporting Standards (IFRS) in accounting?
To regulate tax policies
To establish ethical guidelines for accountants
To harmonize global accounting standards
To monitor stock market volatility
#4
Which financial ratio measures a company's profitability by expressing net income as a percentage of total revenue?
Return on Assets (ROA)
Gross Margin Ratio
Net Profit Margin Ratio
Quick Ratio
#5
Which accounting principle dictates that the accounting records and methods used by a business should be consistent over time?
Matching Principle
Materiality Principle
Consistency Principle
Full Disclosure Principle
#6
What is the purpose of an adjusting journal entry in accounting?
To record routine daily transactions
To correct errors in previous transactions
To close the accounting books at the end of the year
To calculate the total revenue of a company
#7
Which accounting principle requires recording expenses in the period in which they are incurred, rather than when they are paid?
Matching Principle
Revenue Recognition Principle
Conservatism Principle
Time Period Principle
#8
What is the purpose of a trial balance in accounting?
To identify errors and ensure that debits equal credits
To calculate the net income of a company
To prepare financial statements
To record adjusting journal entries
#9
Which financial ratio measures a company's ability to meet its short-term obligations with its most liquid assets?
Return on Investment (ROI)
Current Ratio
Debt-to-Equity Ratio
Earnings Per Share (EPS)
#10
In accounting, what does the term 'contra account' refer to?
An account with a balance opposite to that of its related account
An account used only in managerial accounting
An account with no balance
An account used exclusively for tax purposes
#11
Which financial statement reports the changes in equity of a company over a specific period?
Income Statement
Balance Sheet
Statement of Cash Flows
Statement of Changes in Equity
#12
What is the purpose of the 'double-entry' system in accounting?
To ensure accurate and complete recording of financial transactions
To simplify the accounting process
To reduce the risk of fraud
To minimize the number of accounts needed
#13
In accounting, what does the term 'depreciation' refer to?
Increase in the value of an asset
Decrease in the value of an asset over time
The process of selling an asset
The total revenue generated by an asset
#14
What is the primary purpose of the Sarbanes-Oxley Act (SOX) in the context of financial transactions?
To regulate international trade
To enhance corporate governance and financial reporting
To establish tax regulations
To monitor stock market trends
#15
In accounting, what does the term 'amortization' refer to?
Transfer of assets between subsidiaries
Allocation of the cost of intangible assets over time
Process of adjusting financial statements
Recording interest expenses
#16
What is the purpose of the 'going concern' assumption in accounting?
To assume all transactions are valid
To assume that the company will continue operating for the foreseeable future
To assume that all assets are easily convertible to cash
To assume that the company will be liquidated soon
#17
In financial accounting, what does the term 'consolidation' refer to?
The process of combining financial statements of multiple entities into one
The adjustment of entries at the end of the accounting period
The evaluation of financial performance by external auditors
The allocation of overhead costs to products