#1
Which of the following is a fundamental accounting principle?
Matching principle
Sales principle
Production principle
Advertising principle
#2
Which financial statement reports a company's revenues and expenses for a period of time?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
#3
Which financial statement shows the changes in a company's retained earnings over a period of time?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
#4
Which financial statement is prepared first?
Income statement
Statement of cash flows
Balance sheet
Statement of retained earnings
#5
Which financial statement shows a company's assets, liabilities, and equity at a specific point in time?
Income statement
Statement of cash flows
Balance sheet
Statement of retained earnings
#6
What does the accrual principle state?
Revenue should be recognized when earned
Expenses should be recognized when paid
Revenue should be recognized when cash is received
Expenses should be recognized when incurred
#7
What is the purpose of the accounting equation (Assets = Liabilities + Equity)?
To calculate net income
To calculate return on investment
To show the relationship between assets, liabilities, and equity
To calculate cash flow
#8
What is the purpose of the cash flow statement?
To show the financial position of a company at a specific point in time
To report changes in equity over a period of time
To provide information about a company's cash receipts and cash payments
To disclose information about a company's revenue and expenses
#9
Which accounting principle requires that assets be recorded at the amount paid to acquire them?
Cost principle
Revenue recognition principle
Matching principle
Full disclosure principle
#10
What is the purpose of the adjusting entries in accounting?
To correct errors in the financial statements
To record transactions that have not been previously recorded
To update account balances to reflect the accrual basis of accounting
To close out revenue and expense accounts
#11
Which of the following is an example of a contra account?
Accounts receivable
Accumulated depreciation
Inventory
Prepaid expenses
#12
What is the purpose of the trial balance?
To ensure that total debits equal total credits
To prepare financial statements
To record adjusting entries
To close out revenue and expense accounts
#13
Which of the following is a qualitative characteristic of financial information according to the IFRS?
Relevance
Consistency
Materiality
Timeliness
#14
What is the formula for calculating the current ratio?
Current assets / Current liabilities
Total assets / Total liabilities
Net income / Total assets
Net income / Total equity
#15
What is the formula for calculating return on assets (ROA)?
ROA = Net income / Total assets
ROA = Net income / Total liabilities
ROA = Total assets / Net income
ROA = Total liabilities / Net income