#1
Which of the following is an example of a financial transaction?
Buying groceries with cash
ExplanationA financial transaction involves the exchange of money for goods or services.
#2
What does ROI stand for in finance?
Return On Investment
ExplanationROI measures the profitability of an investment relative to its cost.
#3
Which of the following is considered an intangible asset?
Patent
ExplanationA patent is an intangible asset representing exclusive rights to an invention.
#4
What is the basic accounting equation?
Assets = Liabilities + Equity
ExplanationThe accounting equation represents the balance between a company's assets, liabilities, and equity.
#5
What is the double-entry system in accounting?
Recording each transaction in two separate accounts
ExplanationDouble-entry accounting ensures that every transaction affects two accounts to maintain balance.
#6
Which financial statement shows a company's revenues and expenses over a period?
Income statement
ExplanationThe income statement provides a summary of a company's revenues and expenses, indicating its profitability.
#7
What is the purpose of accrual accounting?
To record transactions when they occur, regardless of when cash is exchanged
ExplanationAccrual accounting recognizes transactions when they happen, not just when cash is exchanged, providing a more accurate financial picture.
#8
What is depreciation in accounting?
A decrease in the value of an asset over time
ExplanationDepreciation accounts for the reduction in the value of an asset due to wear and tear.